Picture: REUTERS
Picture: REUTERS

San Francisco — When Apple reports results on Tuesday, investors will seek insight into upcoming iPhones and how the flagship iPhone X is performing. They also want executives’ thoughts on the growing trade dispute between the US and China.

The technology giant is expected to announce fiscal third-quarter revenue of $52.3bn, according to analyst estimates compiled by Bloomberg. That is in line with the company’s recent forecast and translates to year-on-year revenue growth of about 15%.

Higher average selling prices for iPhones, increased services revenue and unit sales growth for the Apple Watch should drive the expansion, analysts say.

Apple sold about 41.8-million iPhones in the third quarter, up almost 2% from a year earlier, according to Toni Sacconaghi, an analyst at Sanford C Bernstein & Co. Because of the $1,000 iPhone X starting price, analysts on average are expecting iPhone revenue to grow about 17% year on year, Sacconaghi said in a recent note.


He is looking for an average iPhone price of $690, up from $606 in the year-ago quarter.

Steady sales growth like this suggests consumers are still buying iPhones despite expectations that Apple will revamp its smartphone line-up in or around September.

Investors and analysts will also be closely watching Apple’s fiscal fourth-quarter outlook. This is the period when new iPhones are often unveiled.

"We’re looking for 3% growth this quarter, 1% growth next quarter, and flat growth next year, leading analysts to model for the iPhone growth story coming to a close," said Gene Munster, a veteran Apple analyst and cofounder of Loup Ventures. He sees annual iPhone unit growth of zero to 5% for the next several years.

Apple’s Services division is expected to pick up the growth baton from iPhones. Analysts expect revenue from this business to top $9bn in the fiscal third quarter, according to Bernstein research.

Washington’s trade war with China looms over the company. While products like the iPhone are designed in the US, they are assembled in factories based in China. "Apple is going to have to address trade during the earnings call, especially given their extensive involvement in the Chinese supply chain," Cross said.