Apple Q2 Earnings Projections: One Man’s Attempt At The Improbable – Apple Inc. (NASDAQ:AAPL)

As we look with anticipation towards Apple’s (NASDAQ:AAPL) Q2 earnings announcement next week, I thought I’d share a few thoughts on its Q1 earnings call (transcript here on Seeking Alpha). Tim Cook, CEO, stated that the services business would double in 4 years. Taking him at his word, a quick check of the numbers suggests that Q1 2021 service revenue would be about $14.344 billion. With 16 quarters to get there, that’s average growth of $448 million a quarter. This represents a 6.25% growth rate per quarter. To put things into perspective, the previous 4-year period had a 5.92% growth rate per quarter, climbing from $3.687 billion in Q1 2013 to last quarter’s $7.172 billion. So, yeah, it’s quite possible.

And one other thing that Tim mentioned during the Q&A session is that he remains “very bullish” on iPad. Obviously, to those of us that pour over the numbers, this is not reflected in the numbers. Even with an extra week in Q1 2017, iPad revenue dropped $1.5 billion, average sell price dropped $16.22 to $422.98 per unit (personal calculation from Apple SEC filings), and iPad units sold dropped by 3 million units when compared to Q1 2016. So this statement remains to be fulfilled at some point in the future, and I will remain vigilant to report it if and when it becomes evident.

Media “VIX”

To some, this will get a chuckle. Others will think I’m a chucklehead. Others, contrarians like myself, will find it interesting and tuck it away in a corner of our investing mind, to be drawn upon when we need additional input for our decisions.

For a few quarters, I have been conducting a rather informal gauge of Apple “frothiness” by calculating the actual numbers of Apple-related articles here on Seeking Alpha, a poor man’s media “VIX” if you will. This quarter jumped dramatically. The graph below shows the average number of Apple-related articles per day on Seeking Alpha. The timeframe for these fiscal quarters is earnings release to earnings release. The Q2 2017 number is through 4/19.

Quarter

Year

APD

Q3

2015

1.447

Q4

2015

1.582

Q1

2016

1.264

Q2

2016

1.824

Q3

2016

2.198

Q4

2016

2.000

Q1

2017

1.612

Q2 QTD

2017

2.484

Well it certainly appears we haven’t run out of words on our subject yet. But, why the sudden surge, a 45% jump? Are we reaching a frenzy point? Is there that much more to say? I’ll let the readers be the judge. To me, it may be another indication of the fascination and compulsion we have to over-think this company like no other on the planet.

But that’s not why you’re here.

Apple is all about iPhones. Indeed, other revenue generators such as iPads, MACs, and Services all take a back seat to this technological phenomenon. iPhones account for a very disproportionate amount of Apple’s sales. For a more complete analysis on this part of Apple’s business, please see my recent article here.

So what will happen when Apple reports their Q2 results? Let’s look at the numbers and see what we can learn. First, a review of where Apple left us at…

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