Apple Expected To Remain Resilient; Q3 Earnings To Increase Despite China’s Economic Crisis

By Staff Reporter | Jul 21, 2015 07:30 PM EDT

TEXT SIZE    

Apple's quarterly earnings report is scheduled to be published on Tuesday, and many are expecting that it will remain resilient despite the ongoing crisis in China's economy.

There was a drop in Apple's sales compared with the previous months, but it is expected to sell 49.4 million iPhone, CNET reported. This will increase the growth of the company's flagship by 40 percent, leading to increased Q3 earnings.

Greater China, which includes China, Taiwan and Hong Kong, reportedly surpassed the United States becoming Apple's biggest iPhone market and growth driver. Revenues from this region rose three times the growth rate of Europe and the United States.

China's Shanghai Index fell by 30 percent in June, according to Nasdaq. The recent slowdown in its economy can hit Apple, and investors are concerned that this can affect the consumption and demand for high-end products like iPhones.

Equities, however, represent less than 10 percent of the wealth in Chineses' households. This said, there isn't much evidence that previous movements from the stockmarket significantly impacted the household consumption in China.

UBS analyst Steveb Milunovich says that a slowdown in the Chinese economy is risky for Apple. However, they are expecting that the problem with the China's stock market will have a lesser impact in the overall economy of the region.

"We think Apple is OK for now, but we will watch the situation closely," Milunovich said.

Apple is still confident on its iPhone's prospects. In fact, it has been reported earlier that the company asked their suppliers to prepare for a production of over 80 million iPhone next generation units to be released before the year ends.

The high demands for iPhone units, if proven to be true, can have a significant impact on its price. The company is currently modelling 230 million units for 2016, which marks a 5 percent jump from 2015.

Apple's revenue as of late is $49.22 billion, with gross margin at 39.5 percent, data reported by Business Insider.

pre post  |  next post
More Sections