Apple Inc. Q3 Preview: Higher Gross Margin Expected Following Gains in US Smartphone Share
Apple Inc is expected to release its FY Q3 earnings report on July 22 and investors are moving their sights away from the company's future product releases to its current ones out in the market.
Wells Fargo Security analyst Maynard Um said investors may see an increase in Apple's gross profit margin. Apple's guidance for its Q3 gross margin is pegged at 37 to 38 per cent. Um has predicted a higher margin at 38.3 per cent which he attributes to accounting-related issues. He said warranty accruals may decline below claims in third quarter of the fiscal year.
He said Apple's higher gross profit margin may be offset by the company's sales and marketing activities used to prepare for the iPhone 6 launch. Um predicted Apple will report an earnings-per-share (EPS) of $1.27 on total sales of $38.2 billion. His estimates were ahead of Wall Street's prediction of $1.22 EPS on sales of $37.9 billion.
Um expects Apple to sell 12 million iPads, 3.9 million Macs and 1.9 million iPods in Q3. He anticipates iPhone sales for Q3 to be $36.5 million due to product promotions and additional 14 wireless carriers.
Smartphone market share gains
Apple Inc continues to gain market share in the United States. The company remains the number one smartphone manufacturer based on ComScore's latest survey of U.S. smartphone users.
The iPhone maker's market share has increased from 41.3 per cent in February to 41.9 per cent in May. Rival smartphone maker Samsung also gained slightly to reach a 27.8 share followed by LG with 6.5 per cent, Motorola with 6.3 per cent and HTC with 5.1. The bottom three manufacturers saw a downward trend in their respective shares.
Several reports have surfaced that Apple may have misjudged and underestimated the impact of bigger screen smartphones. The strong sales of phones that come with Google's Android operating system may be a sign of bigger things to come if Apple will prove the rumors true in releasing bigger iPhone 6 in September.