Shulou(Shulou.com)11/24 Report--

On the morning of May 4, Beijing time, it is reported that Apple will release its latest results on Thursday local time, but the company's performance this quarter is expected to be somewhat lacklustre, having already told investors that its revenue fell 5% year-on-year last quarter due to the decline in sales of Mac and iPad products.

But Apple will still remind investors that the company has huge size and market forces, after the tech giant used its second-quarter report to tell investors that its board had authorized it to spend on share buybacks and dividends. This is another way to tell the world how profitable its business is and how much cash the company sells each quarter.

Wall Street analysts expect Apple's buybacks and dividends to reach $90 billion, similar to last year's authorizations. "We think Apple will maintain this level," Angelo Zino, an analyst at research firm CFRA, said in an interview.

The iPhone smartphone maker has been the company with the highest repurchase amount over the past decade. Apple spent more than $572 billion on share buybacks from 2012 to the end of 2022, the most of any company, according to FacetSet. Since 2013, Apple has reported the level of board authorization in its second-quarter results.

In terms of buybacks, Apple is followed by its competitor Alphabet, which has bought back $178.5 billion of shares over the past decade. Google's parent company just said its board of directors authorized a $70 billion buyback this year.

Analysts at Bank of America Securities said in a note earlier this month that return on capital would be a "focus" of Apple's earnings report on Thursday. They expect Apple to have a $90 billion license, as do Barclays analysts.

But some people question how long Apple can maintain that level. "We expect AAPL to continue its efforts to achieve net cash neutrality at some point in the future," Barclays said in its report.

Net cash neutrality (a phrase used by Luca Mestri, Apple's treasurer, when asked about buybacks) refers to the point at which a company's cash is roughly equal to its debt. In achieving this, the board can decide to slow the pace of its return on capital.

Apple is currently dealing with cash that has ballooned to $269 billion, its highest level in the past decade. The company says it now has $165 billion in cash and $111 billion in debt, with net cash of $54 billion, the lowest level in years.

Although investors have expected Apple's results to decline in the last quarter and investors are ready, the company's outlook for the next quarter remains uncertain.

Apple has not given any formal performance guidance since the start of the pandemic in 2020, citing too much uncertainty in the current market. But the company's management has been providing investors with data points about individual product lines and the company's overall sales.

Some analysts expect Apple's sales to decline again in June.

"We expect the third-quarter guidance to mean another year-on-year decline, but we expect it to be lower than in the second quarter," Wamsi Mohan of Bank of America wrote in a note this week.

Analysts on average expect apple's revenue to grow by about 2% to $84.7 billion in the third quarter, according to Refinitiv.

Samik Chatterjee, an analyst at JPMorgan Chase, said that even if the outlook is weak, Apple could still benefit from its "escape to security" position. "the end result may only be driven by the outlook for the third quarter, and despite the tough macro situation, investors may be looking for guarantees and limited downside," he wrote in a report released this week. If Apple's outlook shows a year-on-year decline of less than 5%, Apple can still win on fundamentals. "

After all, Apple has huge sales and high profit margins, which is hard to change even if growth is sluggish.

Analysts unanimously expect Apple's second-quarter earnings per share to be $1.43 on sales of $92.97 billion. This sales figure will be 4.4% lower than in the same period last year.

FactSet expects iPhone revenue to fall 3.8% year-on-year to $48.66 billion. The agency also expects a decline in sales across every hardware line.

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