• 07.25.16

What to watch for in Apple’s earnings report Tuesday

Apple will drop its June-ending quarterly earnings results after market close tomorrow, and, as always, most people will be watching iPhone sales. Here’s how the company can put investors at ease:

• Assuage concerns about “peak” iPhone, which persist among investors as sales volumes continue to slide from the heady days of the iPhone 6. (It’s worth noting this is happening amid a decline in device sales worldwide.)

• Report sales of more than 40 million iPhones. The projected 40 million in unit sales would represent a decline of 17% from Q2 2015. 

• Exceed earnings of $1.38 per share on $42.11 billion in revenues. If Apple hits those exact numbers, it would be a 15% drop from Q2 2015 on profits and a 40% drop on revenues. 

• Investors are looking ahead to the release of the next iPhone—which might be called the iPhone 7 or the iPhone 6SE—in early September, hoping for strong holiday sales of the device. Based on what we know of the phone thus far, it will not have enough new features to persuade iPhone 6 and 6s owners to upgrade. But as analyst Gene Munster told CNBC, as many as 275 million iPhones that are more than two years old now exist in the wild, and those are ripe for an upgrade.MS