Apple first quarter seen sparkling on record iPhone sales

If there’s one thing that Wall Street (and The City) gets more excited about than an Apple Inc. earnings release, it’s an Apple earnings release including pivotal Christmas sales.

The season fell in Apple’s fiscal first quarter that ended on 27th December.

It will also yield sales figures for the best-received Apple ‘must have’ products this decade, its iPhone 6 and 6 Plus, another reason for near-feverish market anticipation.

With all signs pointing to a record first quarter handset sales— in the prior quarter, they jumped 16%, and Apple seems happy to stoke speculation that momentum continued—forecasts are by and large optimistic for Q1.

• Apple is expected to report that for the first time, it sold more iPhones in China than in the United States
• Consensus estimates for Q1 iPhone sales see about 69 million. At the same time last year, Apple reported then-record sales of 51 million iPhones for the quarter
• Apple has said “apps generated over $10 billion in revenue for developers” during 2014, and customers spent an unprecedented half-billion dollars on New Year’s Day
• iPad units: analyst forecasts suggest 22 million have been sold, down 14% year over year. (But such declines are an established trend now and won’t upset the market)
• Mac units: 5.5 million units, up 15% year over year. (Again, it very much looks like Apple is re-deploying efforts back into its established computer line, noticing consumers are less ready than planned for platform evolution)

Analysts on average are expecting Apple to report EPS of $2.69/share for Q1

 Source: Thomson Reuters

Judging by consensus forecasts compiled by Thomson Reuter’s SmartEstimate® system, which are updated continually, analyst optimism about the earnings has increased, with forecasts earlier this month suggesting EPS was seen 9 cents lower than current calls.

Forecasts over-juiced?

But there’s also a case holding horses back, at least a little.

Market forecasts are establishing a habit of overshooting reality on the upside for Apple—this has happened specifically in Apple’s first fiscal quarter for the last two years.

The market may be getting wise to this risk.

With the stock 53% higher on a 52-week basis, there are signs investors took some money off the table over the last month, looking at its net circa-2% slippage over that time.

The stock is also lower into its earnings set for tonight, some traditionally unspecified time after the US close (probably at 2100 GMT).

Another point worth remembering is that the first material impact of the recent historic dollar strength is one among a number of upsets that have marred company results during the current US earning season.

Still, there’s no denying the underlying strength in this picture. (This weekly chart is adjusted for the stock split in June 2014.)

Even so, the half-hourly chart of Apple Daily Funded Trade reflects the weaker price of the stock at the moment.

The attached MACD Fast Line / Zero Cross System, as its name suggests, triggers signals by following Moving Average Convergence Divergence principles to the letter.

On that basis, a long-exit signal was triggered at 1600 GMT. Not everyone in the market concurred, and frankly the risks for buyers seem balanced. Especially in view of similar strength in the underlying stock’s chart.

Apple Watch, Apple Pay

Somewhat lower down the list of look-out points in tonight’s results will be further details about Apple Watch.

Reports last week suggested Apple Watch will at least be on a par with comparable products in the closely-eyed arena of battery life, with a 19-hour mixed-use life.

This might be reduced to four hours during ‘exercise tracking’ and perhaps up to four hours of battery life in “heavy use.”

We can also expect a progress update on Apple Pay.

So far, Apple says more than 220,000 locations accept Apple Pay, with card issuers responsible for 90% of credit-card spending supporting the service.

That doesn’t tell us anything about uptake though. We may find out more tonight.