After the bell on Tuesday, Apple is set to report earnings results for the first three months of this year. Investors will be looking for updates that show how much more trouble lies ahead for Apple in 2019.
Wall Street thinks Apple’s business has continued to shrink. The consensus estimate among analysts is for Apple to post $57.4 billion in revenue for the quarter, a 6% drop from the same quarter a year ago. And yet, analysts also believe Apple is recovering some ground.
Rod Hall, an analyst with Goldman Sachs, wrote in an investor note this month that iPhone demand in China is “coming back a little but not all the way to old levels,” based on the firm’s own smartphone market checks.
“It has been Apple’s pricing hubris on iPhone XR that was the major factor in the company’s December earnings debacle in China,” Daniel Ives, an analyst with Wedbush, wrote in an investor note on Friday. “However with some recent price cuts demand trends are slowly turning around in this all-important region for Cupertino.”
But China is only one part of Apple’s iPhone headache.
On a conference call after the company’s last earnings report in January, CEO Tim Cook noted that a popular battery-replacement program and a decrease in carrier smartphone subsidies contributed to the iPhone sales decline too. He also admitted customers are taking longer to upgrade to new iPhones, an issue that could have long-lasting impacts on the company regardless of what happens in China.
Apple’s Services segment, which includes products like Apple Pay, Apple Care and Apple Music, posted a record $10.9 billion in revenue in the holiday quarter, up 19% from the prior year. It’s not the second biggest revenue line, ahead of the Mac and iPad. And Apple is looking to grow it even more: last month it held a splashy, celebrity-filled press event to unveil multiple new paid subscription services.