The iPhone maker scheduled its March quarter earnings report for April 30, and its results, and outlook, will help paint a picture of just how significant coronavirus-related damage could get for Apple in the months ahead.
Analysts are adjusting Apple sales targets based on both supply and demand disruptions owing to the pandemic -- and in the meantime, there’s growing concern that the company may push off its much-anticipated 5G iPhone release in the hopes of an improved environment in December.
“A key topic/discussion point the Street will be laser focused on hearing from Cook is around any clues surrounding Apple's much anticipated 5G launch timetable,” wrote Wedbush analyst Dan Ives in a note on Wednesday. “While mass production of iPhone 12 would not likely start till the May timeframe, the pre-planning, design coordination, and normalizing component shortages in the supply chain make the fall timeframe a very difficult one to hit.”
Apple shares were rising 2.12% on Wednesday to $264.92.
The threats to the 5G launch extend beyond the factory environment in China: Like a multitude of other U.S. firms, shelter-in-place orders have made it more difficult to complete engineering tasks, planning and pre-production for the new phone. And Apple executives are reportedly concerned that launching the high-stakes phone in a recession may be a mistake, as well.
iPhone sales account for approximately half of the company’s overall revenue, and the 5G phone had been widely expected to rev up lagging smartphone sales this year and into 2021.
Ives placed the likelihood of a September launch of the 5G iPhone, as was originally expected, at between 10% and 15%.
Apple executives generally don’t discuss upcoming product releases, and that’s been true for the 5G phone as well: On Apple's last earnings call in January, CEO Tim Cook sidestepped a question about the phone but spoke positively about Apple’s upcoming lineup, saying that 5G deployment was in the “early innings.”
Apple’s March quarter report could nonetheless uncover details on the hurdles Apple is facing -- and what possibilities for the fall may be.
Even if the launch of the 5G iPhone is delayed, it appears likely that Apple will release some new phones this year to capture some of the remaining demand among customers in an upgrade window. Ives estimates that 350 million iPhone users fall in an upgrade window over the next 18 to 24 months.
Apple is reportedly planning to launch a new entry-level iPhone, dubbed the iPhone SE, fairly soon. That phone is expected to have a similar design to the iPhone 8 and cost in the range of $399 and up, according to TF International Securities analyst Ming-Chi Kuo.