Ahead of earnings, GBH Insights' Daniel Ives sees 42 million iPhones sold, and no big surprises — but predicts the real story is what Apple forecasts for 2019 demand. \ In a note published Monday and seen by AppleInsider, Ives predicts that Apple will announced that it sold 42 million iPhones in the third quarter, and predicted "no major surprises" in regards to sales numbers or gross margins. Ives sees Apple's forecasts about the 2019 iPhone demand, as well services numbers, the "main event" of Apple's earnings announcement on Tuesday. Reiterating a note of his from May, Ives continues to see the "window of opportunity" to upgrade over the next 12 to 18 months at 350 million, with Apple needing to capture the majority of those in order to ensure a successful cycle, which will in turn prop up services demand. For that cycle, Ives is with the consensus of most analysts, who see Apple introducing three iPhones this fall- two 5.8 inch to 6.5 inch OLED Plus models, plus a less expensive LCD iPhone. Ives sees their releases as staggered between three and six months. "In terms of the quarter, we believe there could be some upside on the all-important services/software front along with ASPs potentially another bright spot and top-line catalyst," Ives wrote in the note. "In a nutshell, the Street is all focused on the demand trajectory for the September quarter and most importantly into 2019 with the trifecta of next generation iPhones on the horizon and the Street modeling iPhone shipments of roughly 220 million units, which could ultimately prove to be conservative in our opinion given the underlying demand drivers." The analyst maintains a $200 price target and the rating of "highly attractive" for Apple's stock. Heading into Apple's earnings announcement, recent surveys of analyst projections published last week see Apple announcing that it sold around 42 million iPhones in the third quarter, and will announce EPS growth of about 37 percent. Gene Munster, for one, predicted 42 million iPhones sold and said that the iPhone is "becoming a stable business." Various analysts, as they often due in the third quarter, have labeled the quarter boring or insignificant, as it is the last quarter before the arrival of new iPhones.<doc-sep>It’s Apple earnings day, and beaten-up bulls are hoping that means it’s also “Turnaround Tuesday.” The backdrop isn’t exactly that promising, with the Nasdaq having shed nearly 4% over the past three sessions. Morgan Stanley says “the selling has just begun,” and we’re even hearing from perma-bear John Hussman, who runs an underperforming fund that has seen massive outflows. He warns of a “danger zone” for the stock market. But Apple AAPL, -0.04% could come to the rescue with its results after the close, suggests our call of the day, which comes from Ken Berman at Gorilla Trades. “I predict an all-around beat, possibly by as much as $1 billion in sales (over $53 billion), and up to seven cents ($2.26) on per-share earnings,” writes Berman, who is the stock-picking service’s founder and CEO. He predicts the encouraging results will be “driven by a heavier mix of higher-priced iPhones, momentum in iPads and strength in services.” The beat will jolt Apple’s stock higher and push the tech giant’s market cap above $1 trillion, he adds. “Apple will be the first company in history to reach this milestone, but others will quickly follow, notably Amazon, then Alphabet, which I forecast will arrive before Microsoft,” the strategist says. Others point out the Colossus of Cupertino could’ve been a trillionaire long ago, but instead it spent big on buybacks and dividends. Read:Apple earnings — Brace for hints about the next iPhone And see:Earnings Watch — even Apple takes a back seat to Elon Musk’s Tesla right now Also possibly cheering up bulls, Bespoke Investment Group is noting that, if history is any guide, Nasdaq names look set for a rally: Key market gauges Futures for the Dow US:YMU8 , S&P 500 US:ESU8 and Nasdaq-100 US:NQU8 are slightly higher, after the Dow DJIA, +0.03% , S&P SPX, +0.19% and Nasdaq Composite COMP, +0.59% slumped yesterday. With one day left in July, the Dow is up 4.3% for the month, while the S&P and Naz have tacked on 3.1% and 1.6%, respectively. Europe SXXP, +0.00% is slightly higher, after Asia finished mixed. Oil US:CLU8, gold US:GCZ8 and the dollar index DXY, +0.04% are losing ground. Bitcoin BTCUSD, -1.47% is trading back under $8,000. See the Market Snapshot column for more. The chart Motorcycle makers are at a low point. Love for motorcycles — is it an every-other-generation thing? That’s the story told by the Daily Shot chart above, taken from Fundstrat Global. The graphic comes as Harley-Davidson HOG, +2.96% tries to attract the younger riders it needs to grow sales. It’s planning to roll out an electric motorcycle as well as smaller hogs. The buzz Besides Apple, Pandora US:P and Baidu BIDU, +1.09% are slated to report earnings after the close. Pfizer PFE, -1.04% , P&G PG, -0.22% , Cummins CMI, +0.29% and Archer Daniels Midland ADM, -0.15% are among the big names that posted earnings before the opening bell. The Trump administration is reportedly studying a plan to cut capital gains taxes by $100 billion over 10 years by factoring in inflation. Lots of economic reports are on tap today, with readings on employment costs, core inflation and homes prices arriving ahead of the open. Once trading is underway, watch for releases on consumer confidence and Chicagoland’s business conditions. Check out:MarketWatch’s Economic Calendar Amazon HQ2: What City Will Win Jeff Bezos’ Heart? The Federal Reserve’s policy makers are due to start a two-day meeting. Jay Powell & Co. are expected to signal tomorrow that more interest-rate hikes are coming, but not actually raise rates at this month’s meeting. In other central bank news, the Bank of Japan bucked market expectations and kept its ultra-easy monetary policy, sending the dollar up against the yen USDJPY, -0.02% . The quote A shutdown placard is displayed in New York in January. Getty Images “The president sees merit in having this battle after the election.” — An unnamed Trump administration official says President Donald Trump has privately agreed to put off a potential shutdown or any fight over border wall funding until after the midterm elections. That comment comes after Trump had threatened to close down the government. In other Trump news, Secretary of State Mike Pompeo has listed specific conditions for Trump to meet with Iran, hours after the president said he would not require any preconditions. And North Korea appears to be making continued progress on its nuclear and missile program. Plus, Trump is blasting the Koch brothers, and the first trial from Special Counsel Robert Mueller’s investigation is set to begin today — the case against Paul Manafort, the former campaign chief. Random reads A shark stolen with a stroller gets returned to San Antonio’s aquarium. Other aquatic news: Don’t call this whale-dolphin hybrid a “wholphin.” Single women play down career goals in hopes for romance, study says. Mexico’s murder tally has risen to the most on record, going back to 1990. Star Trek and other sci-fi shows get graded, based on their realism. Here’s the case for buying a dash cam. This Hawaiian surfer rode a wave for an epic 2 minutes, covering nearly a mile. Need to Know starts early and is updated until the opening bell, butsign up hereto get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern. Or Follow MarketWatch onTwitterorFacebook. Andsign up hereto get the Friday email highlighting 10 of the best MarketWatch articles of the week.<doc-sep>iPhone trends, Services growth and China commentary are among the things to keep an eye on as Apple's latest earnings report arrives. Though its shares have run up a bit over the past few months, Apple's (AAPL) - Get Report forward earnings multiples are still fairly low, as are near-term investor expectations. That could work in the company's favor as it posts its June quarter earnings report after the close on Tuesday, July 31, and hosts an earnings call at 5 p.m. Eastern. On average, analysts polled by FactSet expect revenue of $52.3 billion (up 15% annually) and GAAP EPS of $2.16 during Apple's seasonally weakest quarter. TheStreet will be live-blogging Apple's report and call on Tuesday after the close. Please check our home page then for more details. For the September quarter, which usually sees new iPhones begin shipping towards its end, the consensus is for revenue of $59.47 billion (up 13%) and EPS of $2.65. Apple provides quarterly sales guidance in its reports. Here are a few things for investors to keep an eye on as the festivities commence. 1. iPhone Sales and Pricing Trends Following a March quarter during which iPhone unit sales rose by only 1.5 million annually to 52.2 million, the consensus is for June quarter iPhone units to rise by 1 million to 42 million. And amid a slew of reports pointing to subdued orders by Apple for next-gen iPhones, the September quarter consensus is for iPhone units to be flat at 47 million. It wouldn't be shocking to see iPhone volumes top those low expectations. Recent data from firms such as Kantar Worldpanel and Wave7 Research suggest the iPhone has been gaining some share in developed markets. In addition, commentary from Samsung and mobile chip suppliers such as Broadcom (AVGO) - Get Report and Skyworks (SWKS) - Get Report indicates Samsung's high-end phone sales are under pressure. And last week, Taiwan Semiconductor (TSM) - Get Report , which has pretty strong iPhone chip exposure, said on its Q2 earnings call that it's slightly more positive now about second-half smartphone demand than it was in April. Meanwhile, iPhone X sales should continue lifting Apple's iPhone average selling price (ASP). In the March quarter, Apple's iPhone ASP rose by $73 annually to $728. For the June quarter, typically a softer one for ASPs, the consensus is for ASP to rise by $87 to $693. The iPhone, it should be remembered, still accounts for over 60% of Apple's annual revenue. 2. Services Growth Apple's Services revenue rose 31% in the March quarter to $9.19 billion, and was a major reason why Apple beat quarterly sales and EPS expectations. App Store transaction growth, Apple Music sign-ups and higher search ad revenue-sharing payments from Alphabet/Google (GOOGL) - Get Report -- provided in exchange for making Google the default search engine on iOS, macOS and the Safari browser -- are believed to be the biggest drivers. Apple Pay transactions and iCloud Storage subscriptions appear to be playing lesser roles. For the June quarter, the consensus is for Services revenue to rise 27% to $9.21 billion. Back in early 2017, Tim Cook declared Apple aims to double its Services revenue by 2020. Apple and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL or GOOGL? Learn more now. 3. Other Products Growth Apple's Other Products segment, which covers the Apple Watch, headphones (Beats and AirPods), Apple TV set-tops, iPods, accessories and most recently HomePods, saw revenue rise 38% in the March quarter to $3.95 billion. The HomePod's February debut helped, but so did strong Apple Watch and AirPods sales. The June quarter consensus is for Other Products revenue to rise 34% to $3.68 billion. HomePod sales likely slipped, but Apple Watch and (especially) AirPods demand still looks pretty healthy. Read Apple Banking on Software and Services as Next Cash Cow as iPhone Sales Slow. 4. The Impact of Buybacks and Currency Swings On the heels of tax reform, which the company is using to repatriate about $207 billion worth of cash post-tax, Apple announced in April that it's launching a new $100 billion stock buyback authorization, and that it would finish using an older $210 billion authorization (it had $10 billion left on it) in the June quarter. All of that suggests there was a healthy amount of EPS-boosting buyback activity took place last quarter. But while buybacks are lifting EPS, the dollar's strengthening since mid-April probably weighed a bit on Apple's top and bottom lines. Unlike many other tech giants, Apple doesn't break out precisely how much currency trends lifted or hurt its revenue. 5. China Numbers and Commentary Apple's Greater China sales (they cover mainland China, Hong Kong and Taiwan) have begun rebounding in recent quarters, after having dropped in fiscal 2016 and 2017. In the March quarter, Greater China revenue rose 21% to $13 billion (21% of Apple's total revenue); Cook indicated iPhones, Macs, wearables and services all played roles. Could trade tensions throw a wrench into the rebound? For now, there are reasons to be cautiously optimistic about avoiding serious damage. Mobile phones aren't on any of the Trump Administrations tariff lists for Chinese-made goods, and thus far, Beijing has avoided calling for boycotts of Apple or other major U.S. consumer brands. Still, any earnings call commentary from Cook or CFO Luca Maestri about the top or bottom-line impact of trade issues is worth closely listening to.<doc-sep>
Apple Inc.’s iPhone unit sales are generally the main focus of the smartphone giant’s earnings reports, but this quarter might be different. Since Apple AAPL, -0.04% is due to release its next iPhone lineup in the next few months, investors may be less concerned with how many iPhones people are buying now and rather more interested in whether underlying trends remain strong at Apple. Here are the key numbers to watch when Apple reports results Tuesday afternoon. Live coverage: Apple earnings will be all about the forecast September outlook The most important data point in the June-quarter report will likely concern the September quarter. With the next iPhone on investors’ minds, the biggest hint Apple might provide on its conference call about the forthcoming device could come in its forecast for the current quarter. Apple typically launches new iPhones in the fall, but its phones don’t always go on sale during the September quarter. Thus, if Apple delivers a somewhat higher-than-expected outlook for the September period, that could suggest the company expects at least some of its new phones to come out during the period. Currently, analysts surveyed by FactSet project $59.5 billion in revenue for the September quarter. Don’t miss: Here’s how much Apple could make from streaming It’s worth noting that the forecast Apple issued a year ago ended up pleasing investors, who saw it as a sign that the company didn’t expect delays with its then-upcoming iPhone line. In the end, Apple’s iPhone 8 and 8 Plus came out in time to count in the September quarter, but its flagship iPhone X didn’t launch until November. For investors tempted to look farther ahead, Bernstein analyst Toni Sacconaghi wrote last week that Apple’s September quarter outlook has historically “ *not* been a helpful predictor of the strength of the forthcoming cycle,” while the company’s gross-margin forecast for the period “has only been helpful when Apple has guided meaningfully lower.” Services revenue An increasingly important part of Apple’s business is its fast-growing services segment, which includes Apple Music, iCloud, and the App Store. For the June quarter, analysts tracked by FactSet project $9.2 billion in services revenue, up from $7.3 billion a year ago. That would amount to a 26% growth rate. “While services grew an eye-popping 31% in the March quarter, we acknowledge that pace is unlikely to be sustainable,” wrote CFRA analyst Angelo Zino. He projects that services revenue will grow 28% in the quarter. Cascend Securities analyst Eric Ross wrote Tuesday that Apple Music could account for almost $800 million in June-quarter revenue, though he expects that the service has lower margins than those offered by Spotify Technology SA SPOT, +0.69% or Pandora Media Inc. US:P (Pandora is also on Tuesday’s earnings docket.) Apple doesn’t break out services revenue by subsection, but it will be worth watching for commentary on Apple Music as well as the App Store. Average selling prices With the next iPhone cycle so close, iPhone sales are less of a focus these days than they normally are. Pay attention to a related metric, however, for a sign of how much consumers are generally willing to pay for phones. Apple’s average selling price is a decent indicator of the mix behind higher- and lower-priced iPhones, as well as whether consumers are experiencing fatigue due to Apple’s high prices. Analysts surveyed by FactSet project that the iPhone commanded an average selling price of $693 during the quarter, up from $606 in the year-earlier period but down from $728 in the March quarter. The June quarter tends to be the lowest quarter seasonally in terms of average selling price. China China revenue is a closely watched but hotly debated element of Apple’s business. Greater China sales have been on the upswing for Apple lately after a period of weakness, but analysts want to know the source of the turnaround. Watch for commentary on whether unit sales in China remain strong, or whether other areas are driving China strength. The services business is likely getting a nice lift in China, and watches could also be helping matters somewhat.