Why Flat Earnings Won't Be the Worst Part of Apple's Quarterly Report

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Due to having put out zero new products this quarter, Apple's quarterly earnings report out Tuesday afternoon won't make the company look any better — and not just because of the expected drop in profit and flat sales. The company will likely report those things, too, according to analyst expectations. But, the most "startlingly bad" news will come in the form of what Apple tells us about its future. This dud of a quarter falls in line with expectations — CEO Tim Cook promised no new products until this fall. Still, some surprisingly good iPhone sales from wireless carriers might carry this quarter, but without a new product, Apple's should post a mere $37.9 billion in revenue, down from $43.6 billion last quarter. 

But the really bad part is the expected reported guidance for next quarter. One prominent Apple analyst expects Apple to issue guidance of only $34 billion to $36 billion in revenue, another drop from this quarter, and a 2 percent drop in year-over-year revenue. Fortune's survey of analysts puts the number even lower at $33.5 to $35.5 billion:

That's crazy talk for Apple, and it's not just because the company quit lowballing on its earnings guidance. Last year in the first quarter had a growth rate of 60 percent. See, Apple should have released some sort of updated iPad by now, say analysts. But because it didn't it will fall flat on sales two quarters in a row. 

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Of course, come September Apple's slated for some product releases alongside the finished iOS 7 mobile software in the form of a cheap iPhone and an iPhone 5S — or something like it. Some analysts even think Apple might tease these releases the idea being it would put Apple back on track for the generally very good holiday quarter, maybe. Some argue that the cheap iPhone will somehow raise Apple's profit margin, but that math takes some very specific modeling. And even with a new iPhone 5 model, consumers have slowed down on smart-phone upgrades. So that might not even be that good. 

In any case, we can expect two bad quarters for the former darling of tech companies, which will mean continued decline of its stock. Or at least no chance of a meteoric rise again. The stock has stabilized of late, around $425 per share — a lot for a normal company, but down from nearly $700 per share this time last year. 

This article is from the archive of our partner The Wire.