Apple predicted to post best holiday quarter revenue ever on strong iPhone 7 sales

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By Mike Wuerthele

Thursday, December 22, 2016, 06:39 am PT (09:39 am ET)

Apple could beat its quarterly record for revenue set at this time last year, on the strength of the iPhone, increased Mac sales, and services, one analyst believes. But that growth could also be at the cost of 2017 expansion and a soft “iPhone 8” demand.


Brean Capital analyst Ananda Baruah believes Apple is looking at a quarter where earnings will exceed $76 billion, topping the record set in Apple’s first fiscal quarter in 2016. He also expects to see a slight increase in revenue gleaned from Mac sales in 2016 versus the year-ago quarter, with a continued drop in iPad sales, but offset by the release of the Apple Watch in September.

Baruah points to the increase of iPhone 7 Plus versus the iPhone 7 sales versus the same comparison to the iPhone 6s family as a reason Apple’s revenue will skew higher than expected. Brean Capital also believes that iPhone sales will hit 78 million on the quarter, a bit higher than estimates from other analyst firms.

The firm believes that the growth will come at the expense of the next quarter. While the analysts previously believed that the second fiscal quarter of 2017 for Apple will see about 56 million iPhones sold, it now believes that there will be closer to 53 million because of weaknesses in the Chinese market.

Overall, Baruah sees metrics in every regard but iPad sales bettering that of the year-ago quarter, with revenue up about $8 billion, and profit up about 3 billion every quarter versus 2016.

While the firm is looking forward to the “iPhone 8,” it points to a “lack of model clarity” and “lack of super-compelling new features” —the same as most analysts did with the iPhone 7 —for what it sees to be a muted demand for the new iPhone range in the fall of 2017.

A pair of purported Apple manufacturing documents leaked to the web on Tuesday suggests that 2017 will see Apple bring three iPhone models to market, including a completely redesigned high-end variant codenamed “Ferrari.”

A three-model lineup corresponds with earlier rumors that Apple intends to launch two upgraded iPhone 7 models, likely branded “iPhone 7s” and “iPhone 7s Plus,” alongside a high-end version stuffed with exotic technologies. This top-tier model, expected to boast a glass sandwich design, borderless OLED display, “invisible” home button, wireless charging and more is the alleged “Ferrari,” according to the latest leaks.

Supply chain rumors continue to differ on a spring iPad refresh, with new units with an “A10X” processor possible in 9.7, 10.5, and 12.9-inch sizes, and the ultimate fate or upgrade specs of the iPad mini unknown.

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