Apple Inc. investors are keeping a close eye on the iPhone sales as the company will release the Q1 2015 earnings report on Tuesday after market close. Investors are expecting a solid revenue beat with iPhone sales around 68 million, with implications of sales of more than 60 million in the March quarter. The only problem is the currency headwinds, which cut back on gross margin improvements since the yen is down 10 percent and the euro is down 12 percent since October 20.
What might offset these gross margin reductions, with RBC Capital Markets analysts suggesting could be yield efficiency, better product mix, and warranty accruals for new phones. The analysts, Mark Shue and Amit Daryanani, said “We think investors will not penalize Apple stock if margins are below expectations as long as units surprise on the upside (very likely).”
RBC is expecting 63.8 million iPhone sales units in Q1 with over 80 percent of them being the newest 6 and 6 Plus versions. Having said that, they are keeping their gross margin estimates unchanged, and have a forecast for 30 bps of expansion to 38.5 percent.
