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Apple earnings report major analyst expectation

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Wall Street analysts may be suffering from a bit of malaise when it comes to Apple. The company will reports its third quarter earnings after the bell on Tuesday and analysts are advising clients to temper their expectations.

Still, analysts and investors alike will be watching for key indicators on a possible 5G iPhone, service revenue growth, and commentary on the ongoing U.S.-China trade dispute. The company is also reeling from the recent departure of chief design officer, Jony Ive.

Even so, the stock is up 31% this year just behind Facebook among the so-called FAANG stocks. FAANG is a group of internet and tech stocks: Facebook, Amazon, Apple, Netflix, and Google.

“In our opinion, investors expect fundamentals to be relatively weak heading into Apple’s F3Q19 earnings despite the recent move in the stock,” Bank of America analyst Wamsi Mohan said.

The feeling was mutual from analysts at UBS.

“Our conversations with investors suggest low expectations for the Q and fall iPhone builds,” they said.

While expectations might be low, that doesn’t mean interest isn’t high, J.P. Morgan said.

“We are heading into Apple’s earnings report with a higher level of investor interest relative to recent history given the confluence of softer macro but also low bar of expectations,” they said.

It could also be one of Apple’s most important quarters according to Bernstein analyst Toni Sacconaghi.

“Historically, Apple’s fiscal Q3 results have meant relatively little to investors, whose focus by this time had typically shifted to next year’s iPhone cycle,” he said.

“Following Apple’s volatile 2019, however, we’d argue that Q3 results will likely matter more than usual, as they could shed further light on the iPhone’s health in China, price elasticity of iPhone sales, given recent price cuts in emerging markets; and /or any contraction or further elongation of iPhone replacement cycles.”

Here’s what else the major analysts expect from Apple’s earnings report:

Morgan Stanley- Overweight rating

“Investor sentiment remains negative despite improving iPhone and Services data points, with low expectations for Sept. quarter suggesting a positive setup into earnings. We see multiple catalysts beyond earnings that make Apple a top pick into year end….The combination of negative investor sentiment, the potential for a Services acceleration in June, and a low bar for September guidance keep us positively biased into earnings. But we believe there is also a clear catalyst path beyond earnings that will help the stock re-rate towards our updated $247 price target over the next 6-9 months, making it a top pick for 2H19.”

Goldman Sachs- Neutral rating

“We believe that consumer and market datapoints suggest in line to slightly weak iPhone sales in FQ3 to June and Services revenue growth in line with our forecast but below consensus. For the guide we believe Apple could upside unit expectations slightly given the earlier launch of all new models in September but we see some risk to ASP expectations given the lower priced XIR launch in September vs. late October in 2018. We continue to believe consensus expectations are high for FQ1 to December with our unit forecast 5% below FactSet consensus. We also do not see various new Services offerings driving enough additional earnings to make a material difference to Apple’s slowing growth profile.”

Bank of America – Buy rating

“In our opinion, investors expect fundamentals to be relatively weak heading into AAPL’s F3Q19 earnings despite the recent move in the stock. Our Apple indicator projects improving trends that could drive some upside to our estimates… We maintain our Buy on stabilization in iPhones, strong capital return program, services growth, and future new products.”

J.P. Morgan- Overweight rating

“We are heading into Apple’s earnings report with a higher level of investor interest relative to recent history given the confluence of softer macro but also low bar of expectations. The level of interest has recently peaked given the backdrop of a softer growth outlook and with the Bears expecting continuing trade concerns to drive a softer earnings report and outlook, while the Bulls are encouraged by the likelihood of upside surprises driven by iPhone shipments bucking the softer macro through momentum of pricing actions/ promotions.”

UBS- Buy rating

“Our conversations with investors suggest low expectations for the Q and Fall iPhone builds. UBS Evidence Lab data meanwhile supports general malaise in sentiment with only 19% “bullish” (down from 30% in April) and China demand/tariffs and services growth are predictably the top investor issues.”

Bernstein- Market-perform rating

“Historically, Apple’s fiscal Q3 results have meant relatively little to investors, whose focus by this time had typically shifted to next year’s iPhone cycle – with anticipation driving seasonal outperformance in the stock. Following Apple’s volatile 2019, however, we’d argue that Q3 results will likely matter more than usual, as they could shed further light on (1) the iPhone’s health in China; (2) price elasticity of iPhone sales, given recent price cuts in emerging markets; and /or (3) any contraction or further elongation of iPhone replacement cycles.”

Credit Suisse- Neutral rating

“While we see the potential in the longer-term shift to Services, we balance that opportunity against sizeable near-term iPhone declines ahead of a more incremental fall refresh before 5G in CY20. Apple’s share price has been surprisingly resilient recently; however, with the stock trading near a peak multiple and the unresolved US-China trade overhang, we prefer to remain on the sidelines awaiting a better entry point and/or line-of sight to significant Services-led EPS upside.”

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Apple redesigns MacBook Pro keyboard

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Apple is finally introducing a replacement to its butterfly keyboard after years of customer complaints.

The company announced on Wednesday a large, expensive MacBook Pro with a keyboard that has been redesigned for the first time in four years.

The computer, which is intended for power users, professionals or anyone who needs a lot of screen space, features a 16-inch retina display, replacing its 15-inch MacBook Pro. It starts at $2,399, but can go all the way up to $6,099 when you tack on additional storage and processing power. The 13-inch entry-level MacBook Pro, which came out earlier this year, starts at $1,299.

The new MacBook Pro promises better battery life, a new Intel Core processor, an updated cooling system and advanced speakers. But the most significant change is the keyboard.

Apple has long faced complaints over broken and sticky keys in its butterfly keyboards — a design with a mechanism under the keys that expands like wings, opening itself up to dust and other debris. The concept allowed Apple to create a slimmer keyboard design, but some tech reviewers have called it Apple’s worst invention of all time.

Now, it’s reverted back to a traditional scissor-style mechanism that most laptops use. The company says the keyboard will have a stable feel and be responsive.

The MacBook Pro comes with many familiar features, including its signature Touch Bar, a fingerprint sensor and Mac apps, but it now offers double the default storage and pricey upgrade options, up to eight terabytes of storage. (This may appeal to people who have large files and wallets.)

The MacBook Pro is available for purchase online Wednesday in space gray or silver colors. It hits stores later this week.

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Apple thinks glasses will replace smartphones

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Apple is planning to launch its first augmented reality (AR) product sometime in 2022. According to a report from The Information, citing sources attending an internal Apple presentation, Cupertino wants to release an augmented reality headset in 2022 and a pair of AR glasses by 2023. These “Apple Glasses” have popped up in previous rumors with an earlier launch date in 2020, but this new report reveals a far more concrete plan than previous accounts.

Product details are thin on the ground, but a few design points pop up in the report. The products will be designed with gaming, video, and virtual meetings in mind, according to Bloomberg. The Apple Glasses AR capabilities hinge on a new 3D sensor system, developed in-house at Apple over several years. Apparently, this is a more advanced form of FaceID technology used in modern iPhones. Apple is allegedly working on lenses that darken when the wearer is using AR. This is to let others know the user is not necessarily paying attention to them.

Apple has about 1,000 engineers working on the AR and VR initiative. CEO Tim Cook has been hot on the idea of AR for a number of years now. The report also mentions plans to begin attracting developers to the platform in 2021. Clearly, this is a major business commitment, not a small side project.

More posts about AR and VR

Apple Glasses to replace the iPhone

Perhaps the most interesting part of the report states that Apple believes augmented reality glasses will eventually replace smartphones. This will occur “in roughly a decade,” according to executives at the presentation. By 2030, Apple expects that the iPhone, and by extension Android phones too, will be obsolete — at least in high-end Western markets.

That’s no easy task. Current AR glasses pair up to a smartphone, which provides the data connectivity, storage, and bulk of the processing capabilities required by AR apps. Moving this entirely into a set of sleek, lightweight glasses will require a number of engineering breakthroughs. Apple’s first-generation AR products certainly won’t offer fully standalone capabilities. You’ll still need a phone in your pocket. Instead, the company is reportedly working on a new operating system, dubbed rOS, to enable existing devices to work with future headsets and glasses.

Barring the technological hurdles, there’s little reason to believe AR glasses can’t replace most of our smartphone needs. Messaging and calls are certainly possible, as is watching video and navigating with real-world map directions. The other hurdle is solving user interaction, something that advances in voice recognition and 3D object detection technology will likely be key to solving.

Augmented reality is already here, but new form factors will enhance the experience.

It’s easy to imagine the possibilities with AR, as some examples have already proven immensely popular. 2016’s Pokémon Go phenomenon was likely many people’s first foray into the world of AR. Today, consumers are using AR for Snapchat filters, real-time text translation, viewing the stars, and kitting our apartments. AR is already useful on smartphones, but AR glasses open up new possibilities for even more useful and engrossing experiences — ranging from in-world games to real-time contextual information on everything from directions to people.

Haven’t we been here before?

Apple certainly isn’t the first company to believe in AR as a future consumer product. Microsoft has been developing HoloLens for years and has just launched HoloLens 2 for businesses with an eye-watering $3,500 price tag. There’s also Google Glass, which was hounded out of the market by privacy advocates in its prototype launch period, although it remains in development for enterprise users. A number of other companies are working on the idea, including Epson, Toshiba, and Vuzix, among others. However, the majority fall under enterprise and specialist products.

Apple is banking on consumer appeal, but that’s a big ask. It is possible Apple Glasses will receive a warmer reception than Google Glass, given the US media’s often more sympathetic coverage of Cupertino over Mountain View. Its launch may also be more prime time ready, providing a robust developer platform and app ecosystem are ready to go at launch. However, consumer privacy concerns regarding camera and video recording, consent, and data collection will be a sticking point.

Privacy concerns and recording consent issues don’t disappear just because it’s Apple.

There’s no getting around the fact that AR glasses will fundamentally change the way we interact with the world and each other, but also the way in which technology interacts with us. Dedicated AR devices, like glasses, will consume even more data about our surroundings, taking in audio and visual cues from our lives to provide and contextualize content. Furthermore, we will likely wear glass throughout even more intimate aspects of our lives than a phone witnesses in our pocket. Having said that, consumers don’t seem too alarmed at the privacy implications of smart home products.

AR and the future of personal computing

Using Google Lens to identify a bunch of bananas as seen on the camera of the OnePlus 7 Pro.

Augmented reality is the inevitable next step in personal and enterprise computing. Its uses are bound to range from the essentials through to entertainment and the mundane. AR is clearly central to Apple’s future product plans, but it’s far from the only company working on the technology. Expect augmented reality to become increasingly popular in smartphones at all price points over the coming years. The next few years in mobile will lay down the building blocks for future AR-first products like Apple Glasses.

We’ll have to see whether wearable products like the Apple Glasses are the form factor that AR inevitably settles in. Perhaps phones will remain the preferred option for their flexibility if nothing else. Predicting the death of the smartphone within a decade is a bold move by Apple, but inevitably the tech world will move on. AR is as likely as any other to be that next big leap.

More posts about AR glasses

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Samsung Galaxy S11 hole-punch camera will be tiny – Pocket-lint

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The latest rumour regarding the Samsung Galaxy S11 suggests that the front facing camera will be placed within an even smaller hole-punch cutout than the Note 10.

It’s a relatively minor point on a smartphone that’s likely to be one of 2020’s most impressive devices, but it will mean an improved experience of the screen.

It goes without saying that having a smaller cutout for the camera means that it becomes less intrusive, and won’t block as much of what you have being displayed.

This information comes via @UniverseIce on Twitter, a leaker with a reliable track record in the mobile world.

We’ve already heard that the S11 will come in three different sizes, similar to the Galaxy S10, and that it will have a bigger battery than the S10.

Of course, hole-punch camera cutouts are a temporary measure until mainstream phone manufacturers figure out a way to implement an in-display selfie camera hidden beneath the display panel.

The aim from most of the smartphone makers is to create an edge-to-edge screen with no intrusion at all. It’s why some – like OnePlus and Oppo – have gone for a pop-up camera mechanism rather than have a notch or hole-punch camera at all.

Samsung’s next flagship is expected to launch around its usual timeframe in Spring 2020, kicking off next year’s new wave of high end smartphones.

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