After the close today, Apple will announce fourth-quarter and year-end results for fiscal 2014. But with the new iPhone going on sale just 11 days before the end of the quarter and the Chinese release not occurring until last Friday, what Apple says about the future will garner more even scrutiny than is typical and the results of the past 3 months will be quickly forgotten. With that in mind, there are some things to watch out for in the numbers and elsewhere. Here are five of them.
Just how good was Q4?
Last year, Apple sold 33.8 million iPhones in the quarter and this year a consensus forecast compiled by Philip Elmer-DeWitt at Fortune has the number at 37.8 million. That's 12% growth year over year -- solid but unspectacular. Forbes' own Chuck Jones incidentally believes the number will be 39 million. Tim Cook last week said iPhone 6 and 6 Plus were "the fastest selling iPhones in history. And the first 30 days we have set a new high water mark for the most orders taken and I don't mean by a little -- by a lot, a whole lot." With 10 million sold in the opening weekend, Apple clearly got off to a good start. Cook strongly suggested that hot hand continued well into October. Given how much iPhone matters to Apple, this will be closely scrutinized.
Also watched closely will be the iPad numbers, though not much is expected there. The Fortune consensus is for 13.1 million, down from last year's 14.1 million. In a rare occurrence, the amateur analysts (not a knock on them, they just don't do it for a living) are less bullish than the pros. Apple hasn't even begun selling its new iPads yet but has cut prices on older models presumably to help boost unit volumes heading into the holiday season. It's hard to take away too much from last quarter's numbers, then, except to see if they provide any context for recent moves.
Where's the stock buyback at?
Apple had sliced its share count to 6.05 billion from nearly 6.5 billion a year ago. It still had $40 billion left in its buyback authorization and just 6 quarters left to finish things off as of the end of the June quarter. The stock has been flirting with all-time highs so it'll be noteworthy whether Apple has been buying more or less aggressively over the past 3 months. If things are status quo -- about $5 billion worth -- it signals nothing.
In the meantime, Carl Icahn is agitating for the company to increase the authorization far beyond the $90 billion total Apple already had committed. Icahn wants Apple to spend some of its $133 billion in net cash buying its own stock, which he believes is worth more than $200 per share. He won't get that, but he might get an announcement of something, including perhaps a dividend hike. Short of announcing a takeover of Netflix and some other multi-billion-dollar acquisition, Apple has used less than 10% of its cash even while paying out dividends and spending big on share buybacks.
Does Cook say anything more about "new products"?
Now that Apple has rolled out Apple Pay and announced the Apple Watch for early next year, Cook seems to have fulfilled his promise of delivering multiple new products. But is there more in the pipeline that constitutes those things people haven't even speculated on that he offhandedly mentioned to Charlie Rose in an interview last month? The mere mention that such things might be coming would be tantalizing.
What about product strategy and pricing generally?
With 56 iPad models at 16 different prices, Apple seems to be saying: "If you want one, we have one, no matter what price, color, or features you need." With the iPhone 6 and 6 Plus joining the smaller 5c, it's taken a similar approach to phones. This is a different approach to those products than Apple originally took but very much akin to the development of the iPod over time, which morphed into numerous sizes, shapes, and form factors. Some of those lasted several years, some came and went quickly. Is the proliferation of SKUs for iPad and iPhone a sign the products are maturing or a sign that Apple is? Does the $249 Mini suggest Apple is moving slightly downmarket to capture a larger customer base?
Will the company say anything concrete about markets where it's weak?
Usually the conference calls are all about growth here, growth there. But it's difficult to deny that Apple struggles in both less rich countries like India, where it's practically a non-entity, and even as you move up the scale to Spain, Brazil and Germany, where iPhone is under 10% market share. With Apple so strong in the U.S. (around 42% and slowly rising), does the company see any merit in trying to push its share up elsewhere, especially as current products reach a mature phase?
I'll be back later with a live blog of the earnings results as well as post call analysis.
