January 26, 2016 Last Updated 8:15 am

Apple earnings: no, the company won’t ‘miss’ but there will be plenty of disappointed pundits

Apple and other tech companies are coming under scrutiny for their low bills versus their record revenue and profit reports, leading to audits and demands for back taxes

No company dominates earnings like Apple. Sure, what Google (oh, I guess we should call them Alphabet, right?) and Amazon are headline makers, and earnings from the NYTCo., Gannett, Time Inc, and others get the attention of media folk. But no company has their earnings make as many headlines as Apple.

There is talk today that Apple might ‘miss’. This is highly unlikely. Of course, you can define ‘miss’ many ways, but the generally accepted way to ‘miss’ is to miss a company’s own forecasts. When that happens the company usually goes out of their way to warn investors – at least the smart CEOs do that.

Apple didn’t warn, though there were plenty of rumors, leaks and news that suggest that iPhone sales have slowed. But my own guess is that once again Apple will wow investors with their revenue and income.

But that will be only part of the story. Here at TNM we always monitor iPad sales and this quarter may be eighth quarter in a row that sees Apple’s iPad sales lower than the same quarter the prior year.


The peak for iPad sales was the holiday quarter of 2013 (or Q1 in Apple’s 2014 fiscal year). That year Apple introduced a retina display iPad mini, as well as an updated model of the standard sized iPad. Publishers were, back at the end of 2013, still reporting rising digital edition sales. But Apple’s App Store had already given up on the Newsstand, and for several months that year the Newsstand subcategories were completely broken, showing only a couple of apps per category. Apple fixed that eventually, but since then they have never maintained the subcategories of either the Newsstand or now the new Magazines & Newspapers category, costing publishers thousands, if not millions of dollars in sales.

Apple Watch sales will probably get a mention in CEO Tim Cook’s earnings conference call, and maybe a line or two in the press release. But unless Apple makes a change in the way it reports Apple Watch sales, the totals will be included inside the Other Products category, making it hard to know exactly what level of success the company is having with the product )(though if there is good news I’m sure Apple will be eager to tell us).

A lot of focus will be on revenue from China. Last quarter Apple reported that revenue grew 99 percent over the same quarter the year prior. It will be hard to maintain this level of growth, that’s for sure.

In fact, a slowing Chinese economy might be the excuse Apple hangs its hat on should it actually miss forecasts, and that is certainly understandable. Few economists really trust the economic data that comes out of the Chinese government, but we have sales figures from companies like Apple that provide another view.

I don’t often listen in to the Apple conference call, but this one might be interesting.

European governments are starting to crack down on tech companies concerning back taxes, and recently CEO Tim Cook flew to Brussels to hold talks with the European Union’s antitrust chief Margarethe Vestager. Apple, it is said, may face a potential tax bill of up to $19 billion, something Apple did warn investors about.

Countries are not looking kindly at the low tax bills being paid by tech companies making huge revenue and profits in their markets. Apple, for instance, paid $85 million in Australian income tax last year, despite making almost $8 billion in revenue, something that has the authorities investigating. Apple’s response is the same it always makes: “Apple Australia pays all taxes it owes in accordance with Australian law.”

But the Australian government is now auditing Apple for the 2012 year, with future audits sure to be conducted. For Apple, Amazon and Google, headquartered in a nation that sees avoiding taxes as a patriotic duty, dealing with countries that don’t see things that way may become a new way of life.

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