Preview of Apple’s June Quarter

Memory prices won’t have had a big impact

As we move ahead into the June quarter, I’d like to review our outlook, […]. Importantly, the color we’re providing assumes that global tariff rates, policies, and their application remain in effect as of this call [and that] the global macroeconomic outlook does not worsen from today.

We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year.

We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable.

We expect gross margin to be between 47.5% and 48.5%. We expect operating expenses to be between $18.8 billion and $19.1 billion. We expect OI&E to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. – Kevan Parekh, CFO

Apple will report results on July 30th. We will conduct Office Hours to discuss them the next day. In anticipation, here are my estimates:

The revenue guidance of 14% to 17% follows a 16.6% increase in the previous quarter. My estimate is growth of 15.9% consisting of the following segments:

• iPhone +21%
• Mac +15%
• iPad -3%
• Services +16%
• Wearables +4%

My gross margin estimate is 48.5% based on the following segments:

• iPhone 38.2%
• Mac 31%
• iPad 26%
• Services 77%
• Wearables 41.8%

My estimate for operating expenses is the maximum of the range ($19.1 billion.) OI&E is set at the same level as guidance ($250 million) and the tax rate also set at the estimated 17%.

I expect the number of outstanding shares to decrease by 74 million to 14.625 billion. This is a reduction in the rate of re-purchase from the previous quarter’s 80 million and the average over the previous 4 quarters of 83 million. This is due to higher share pricing.

As a result of these estimates, the fully diluted Earnings Per Share should be $1.93, a 23% increase from the prior year. Trailing 12 months’ EPS would thus be $8.63, with a corresponding trailing P/E of 38.6 at the closing price last Friday.

My estimates were made soon after the May conference call quoted above.

Has something happened since to change these estimates?

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