Analysts are expecting Apple to post earnings at the top end of its guidance for its fiscal fourth quarter, boosted by Galaxy Note 7 owners who decided to have the explosive smartphone replaced with the iPhone 7.
Famed Apple analyst Ming-Chi Kuo previously said that he expects 5 million to 7 million Galaxy Note 7 orders to translate into that many sales for the iPhone 7 or iPhone 7 Plus, as customers ditched Samsung for Apple.
However, estimates reveal that the wave of new customers from Samsung's Galaxy Note 7 issues is not enough to prevent a third straight quarterly drop in units sales for the iPhone, primarily due to the oversaturation of developed markets and the emergence of lower-priced smartphones.
Apple is expected to report sales of 44.8 million iPhones for the quarter, which is a 6.7 percent decline from the 48.04 million units sold in the corresponding quarter last year.
Investors will be looking forward to Apple's commentary and new guidance to find out whether the iPhone 7, as well as the next flagship smartphone currently known as the iPhone 8, could finally reverse the trend of declining iPhone sales.
"It's been a challenged smartphone industry, and consumers as well as the industry have been yearning for that next major smartphone release," said Synchronoss Technologies senior VP of finance and corporate development Dan Ives.
This will be the first quarter that will include sales for the iPhone 7, though only the smartphone's first two weeks of sales will be included. Many analysts will be taking a close look on how the smartphone is performing in China, as the country is responsible for almost 25 percent of the total sales of Apple by geography.
According to Steven Milunovich, an analyst for UBS, checking with distributors in China revealed that Apple could be selling fewer units of the iPhone 7 in the country. However, it seems that Apple is seeing greater success on sales for the larger iPhone 7 Plus.
The company is also expected to book revenue of $46.9 billion, equivalent to earnings of $1.65 per share, which are also declines from the revenue of $51.5 billion and earnings of $1.96 per share from the fiscal fourth quarter of last year.
The failing iPhone sales could also end the streak of 14 straight years of growing revenue for Apple, as the company is expected to unveil $215.7 billion in annual sales, which is down by 8 percent compared to sales of $233.7 billion for the previous fiscal year.
