Apple Earnings Preview: iPhone 6 Launch vs. Dividend and Buyback

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Wednesday afternoon likely will be make or break for Apple Inc. (NASDAQ: AAPL) after it reports its second-quarter earnings. The consumer electronics giant has seen its former days of the Steve Jobs glory fade, without much in the way of new products. If the company can excite the street about a slightly larger format phone, or two iPhone 6 launches, that may change.

Earnings estimates are $10.18 per share, compared with $10.09 a year ago, which is not exactly stellar growth when you consider that Apple has been buying back shares as well. Thomson Reuters has revenues pegged at $43.53 billion, which would be a tiny 0.2% drop from the $43.60 billion a year ago.

Apple’s second-quarter guidance from January called for revenue between $42 billion and $44 billion, gross margin between 37% and 38%, operating expenses between $4.3 billion and $4.4 billion, other income/(expense) of $200 million and a tax rate of 26.2%.

The so-called whisper number, according to WhisperNumber.com, is $10.29 per-share earnings, and with a range of $9.95 to $10.50.

ALSO READ: Why Apple Should Just Buy Netflix

One additional hope is for a dividend hike and more news of the buyback plans ahead. Apple and Tim Cook are no longer under the pressure of activist investor Carl Icahn, but Apple’s quarterly dividend of $3.05 per share has now been paid four quarters in a row.

We also will be looking to see how China Mobile played into this past quarter. The company’s international sales accounted for 63% of last quarter’s revenue.

Another concern is that iPads and iPhones are believed by some investors and analysts to be a drag on Apple’s Mac sales. The company’s most recent quarter showed that it sold 4.8 million Macs, versus 4.1 million a year earlier (the holiday quarter). If we compare today’s number in Mac sales for the March quarter, Apple sold just under 4 million Macs in the quarter this year versus 4 million in the March quarter of 2012.

Apple shares closed at $531.70 on Tuesday, against a 52-week range of $388.87 to $575.14. The consensus price target for the stock is almost $595. As far as chart support, the 50-day moving average is right around the current price at $531.70, and the 200-day moving average is down a $507.81.