The latest quarterly profit report from Apple early Wednesday morning, our time, could very well change investor perceptions about the health of the US economy and the current reporting season after last Thursday’s trio of tech positive profit shocks from Amazon, Microsoft and Alphabet Inc (Google).
Apple reports its 4th quarter and full year figures, it balances on September 30, unlike many other companies which rule off their books at the end of December – such as Microsoft, Amazon and Alphabet. Twitter is also due to report this week as well
Analysts will be keeping close watch on how sales of the new iPhone in China fared in the quarter amid the jump in volatility in in the world’s second-biggest economy.
The fourth quarter is typically Apple’s second-weakest of the year, as it comes just ahead of the busy holiday season around the world.
But analysts are anticipating strong iPhone sales, fuelled by the release of the iPhone 6s and iPhone 6s Plus in September and software updates.
A break out quarter for Apple like Amazon had though could trigger a surge in share prices, especially after the European Central Bank raised the strong possibility of further easing and interest rate cuts in December, and then the Chinese central bank cut interest rates for a 6th time in 11 months late on Friday night.
The quarterly reports from Microsoft, Amazon and Alphabet changed the view of the current reporting season as all did much better than forecast, especially Amazon and Alphabet.
Amazon shares jumped 6.9% (and the company’s value of $US280 billion) after it reported a surprise profit, and a surge in earnings and revenue from its cloud computing business – and it forecast an operating profit for the holiday season dominated 4th quarter
Alphabet lifted revenue by more than anyone had forecast, boosted profit, employed more people, kept a lid on costs and announced a $US5 billion buyback and the shares surged, taking the value of the company to $US483 billion and second after Apple in the list of most valuable companies on Wall Street.
Apple shares rose more than 3% on Friday and the company’s value finished at $US679 billion and number one.
Microsoft shares ended the week at new 15 year highs and with a market value of $US424 billion.
The three companies in fact added more than $US90 billion in extra value on Friday alone, or more than the combined value of the Murdoch companies, News Corp and 21st Century Fox.
Apple’s report will overshadow those from a range of other major companies – such as energy Shell, BP, ExxonMobil, Chevron and ConocoPhillips which will tell us just how the slide in oil and gas prices has hurt the sector and whether another round of spending cuts will be needed.
Of great interest will be whether these giants to maintain dividend payments to shareholders in the face of the slowdown, starting with Shell which will produce massive losses from the ending of its expensive drilling campaign in the Arctic.
Analysts expect profits at Exxon, BP and Shell and Chevron to have dropped by more than 50% on the back of the collapse in oil and gas prices (which hit a new three year low in the US on Friday night).
Pharma giants Pfizer and Merck also reveal their earnings this week, while car giants GM and Ford also report
But a press conference Monday night, our time by the aggressive Valeant Pharmaceuticals International, respond to allegations about its accounting and its relationship with specialty pharmacies/distributors and its accounting practices, could damage investor sentiment if the charges against Valeant are not rebutted to the satisfaction of an increasingly sceptical investment community.
Valeant’s standing has been damaged by claims from hedge funds and short sellers about its accounting practices, which have raised questions about its finances and underlying strength. That has seen its shares fall more than 30% in the past week or so.
That apart, companies reporting this week include, Garmin, Xerox, Ford, Whirlpool, BP, Pfizer, Alibaba, Apple, Coach, Merck & Co, Ralph Lauren, Comcast, Novartis, Peabody Energy, Andadarko Petroleum, Twitter, Simon Property Group, United Parcel Service, Visa, PayPal, and Starwood Hotels & Resorts, Shell, ConocoPhillips, Mastercard, Time Warner, Newmont Mining, Johnson and Johnson, ExxonMobil, Iron Mountain, Western Union and Starbucks.
