San Francisco: Apple Inc’s multi-hundred billion cash stockpile and stalling growth in services such as iCloud present an opportunity and a concern that some investors hope will be addressed in the company’s quarterly earnings report on Tuesday.
The iPhone is by far the biggest product from Apple, accounting for more than 60 percent of its revenue last year, but Chief Executive Tim Cook and other executives have targeted services as a path to growth.
Disappointing forecasts from the iPhone supply chain have lowered expectations for unit sales.
Analysts such as Bernstein’s Toni Sacconaghi estimate as few as 51 million handsets were sold in the fiscal second quarter, versus Wall Street expectations of 54 million phones, versus 50.7 million in the year-ago period. Overall, Wall Street has lowered its expectations for iPhone revenue from $39.7 billion on April 17 to $39.2 billion.
Sacconaghi expects the iPhone business to dominate discussions of the results, but some investors think a better question is whether Apple can deliver on its plan to ramp up services revenue from Apple Music, iCloud and the App Store.
Tom Plumb, founder of Wisconsin Capital Management and an Apple shareholder, said Apple should seek out recurring revenue in areas such as financial services. Apple could use the cash to bolster its Apple Pay product by buying a company like American Express Co (AXP.N) or making other investments to make consistent revenue off transactions.