Apple sales to fall for second straight quarter
LOS ANGELES — Get used to the new regime for Apple: falling year-over-year results.
When the iconic maker of iPhones, computers and tablets announces earnings late Tuesday, analysts expect Apple (AAPL) to report a 15% revenue drop from the year-ago quarter, to $42.1 billion, from $49.6 billion.
In the previous quarter, Apple's iPhone sales fell for the first time, revenue and earnings slid, and analysts expect that trend to continue in the new quarter.
Earnings per share are forecast at $1.38, down 25% from $1.85 a share, in the year-ago quarter, according to S&P Global Market Intelligence.
However, the upcoming iPhone refresh in September “should help stabilize revenue following recent declines,” S&P analyst Angelo Zino said in a note to investors.
According to several Apple enthusiast blogs, unlike previous years, Apple may not do a major re-design of the iPhone, which it did in 2014, 2012 and 2010.
Instead, Apple may wait for an all-new design to the iPhone for 2017, the 10th anniversary year of the device, and use 2016 to introduce a new and improved iPhone with several upgrade features within the familiar design.
New redesigned iPhone? You may have to wait
Apple would take a hit on the short term, says Forrester Research analyst Julie Ask, but make it up long term, getting a bigger bang for the buck by waiting for major new features in an anniversary year.
By making the major upgrade cycle longer at three years, instead of two, Apple is "waiting a year to get a bigger pop," she says.
Gene Munster, an analyst with Piper Jaffray, doesn't buy it.
"It would be a big mistake, and I don't think Apple will do it."
Ask Matt: How bad will Apple's profit be?
Munster expects Apple to announce sales of 41 million iPhones in the quarter. That’s down from 51.2 million in the previous quarter, which was 16% lower than the year ago quarter.
The big question for Apple is whether the iPhone, which represents two-thirds of Apple's overall revenues, has peaked. Sales have declined for a number of factors--consumer indifference to the new features on the 6S models, introduced in 2015, and the fact that the phones have gotten so good, customers have held onto them for longer.
Despite taking a hit for China this year--Munster says revenues there will be down 14% for the quarter, the analyst doesn't believe the iPhone is over for Apple. "There's still a lot of room to grow."
But he notes that Apple is now spending 4.8% of revenues, or $10.5 billion, on research and development, up from 2.5% 5 years ago and that bodes well for new product categories in the future.
Follow USA TODAY's Jefferson Graham on Twitter, @jeffersongraham.