Apple faces $8 billion in profit risk, other problems – analyst

Apple’s stock has been under pressure for most of the year and, besides iPhone’s sales issues in China, investors might want to take note of other potential issues ahead, a Wall Street analyst says.

Karishma Vanjani for Barron’s:
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Shares are down 12% this year compared with a 6% gain for the S&P 500… [A]nalysts predict March quarter sales will fall 4.3% from the year earlier. Apple has abandoned its decade-long effort to produce cars and the latest data showed iPhone shipments dropped almost 10% in the first quarter.

Closing arguments in an antitrust case against Google’s monopoly on internet search are first, from May 1-3. The case targets the roughly $18 billion in estimated payments made to Apple every year for Google’s default placement for search on Apple devices.

“The potential punishment that would have the greatest impact on Apple would be for the judge to forbid the payment for default search placement arrangement,” wrote Evercore’s Amit Daryanani on Tuesday. He estimated about $8 billion in fiscal net income is at risk for Apple.

The Justice Department, in a separate March lawsuit, has also contended that Apple violated antitrust laws to cement the iPhone’s dominant position in the smartphone market using various strategies. Daryanani doesn’t see a material impact to Apple’s revenue from this challenge.

The government could lose both cases.

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MacDailyNews Note: Analysts’ consensus is currently looking for Apple to report $1.51 EPS (vs. $1.52 YoY) on revenue of $90.7 billion (vs. $94.8 billion YoY) for its second fiscal quarter. Apple will report Q224 results on Thursday, May 2, 2024 after market close.

[I]n the March quarter a year ago, we were able to replenish channel inventory and fulfill significant pent-up demand from the constraints. We estimate that this impact added close to $5 billion to the March quarter’s total revenue last year. When we remove this impact from last year’s revenue, we expect both our March quarter total company revenue and iPhone revenue to be similar to a year ago. – Apple CFO Luca Maestri, May 4, 2023
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Support MacDailyNews at no extra cost to you by using this link to shop at Amazon.Apple Faces $8 Billion in Profit Risk

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