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5 Questions Apple Inc. (AAPL) Earnings Should Answer

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Apple Inc. (NASDAQ: AAPL ) will release its second-quarter results on Tuesday. But unlike past reports, Apple earnings won't be the center of attention - nor is it likely that the numbers alone will move AAPL stock.

Here's What Apple Inc. (AAPL) Should Do With All Its Cash

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Two different investment banks - JPMorgan Chase & Co. (NYSE: JPM ) and UBS Group AG (USA) (NYSE: UBS ) - already have predicted Apple earnings and guidance could miss expectations. And yet both firms remain bullish on Apple stock.

The logic behind the divergence is clear, and the market as a whole should take a similar view in valuing AAPL stock after Apple earnings. Apple's new iPhone is on the way - and investors already are looking forward.

The Q2 report isn't going to be about Apple earnings - it's going to be about the Apple earnings conference call . Apple stock holders have a lot of questions to ask - and it will be up to AAPL CEO Tim Cook to give the right answers.

When's That New iPhone Coming Out?

The most anticipated question is whether Apple will give more detail on the next iPhone. Apple already is gaining market share ahead of the release later this year - but AAPL investors want more.

It's possible that announcements here - or the lack thereof - could move Apple stock. It's starting to look as if supplier delays may push back the new iPhone's release date. Samsung is reportedly struggling to supply OLED panels for the device, and contract manufacturers are behind schedule.

A delay would push the release of the as-yet-unnamed new model toward Christmas - and that could unnerve investors in AAPL stock, at least in the short term.

Is AAPL In the M&A Market?

An analyst report in early April spurred rumors of an acquisition by Apple of Walt Disney Co (NYSE: DIS ). And while such a combination seems unlikely, it is clear that Apple at the least is considering a buyout of a size much larger than it has traditionally executed.

Cook hinted at M&A on the Q1 conference call, saying "we are always looking at acquisitions…and we look for companies of all sizes, and there's not a size that we would not do based on just the size of it." Given the rumors of late, investors surely will be reading into any further comments to get a better read on Apple's M&A ambitions.

How's the Services Business Doing?

The one fundamental metric that may move Apple stock is its services revenue. Apple sales excluding the iPhone have been bizarrely consistent over the past five years, and the company simply hasn't been able to drive any non-iPhone growth. The iPod faded, and was replaced by the iPad. It too has faded, offsetting growth in Apple Music and other initiatives.

Cook has laid out a target to double services revenue - which might require some of the aforementioned M&A. And at some point, Apple needs real growth beyond the iPhone to increase the multiple of Apple earnings assigned to AAPL stock. As a result, investors will be watching that metric closely. But there too, there will be questions about strategy. Is Apple really planning to roll out Apple Cash ? Where is the self-driving car initiative headed? And is that ~$50 billion target still viable?

What's the Strategy With Qualcomm?

This question may be more relevant to investors in Qualcomm, Inc. (NASDAQ: QCOM ) than in Apple stock. QCOM shares fell 4% on Friday after Apple stopped paying royalties .

Apple can survive a protracted battle, and given the relative size a 'win' for Apple does less for AAPL stock than a 'loss' for Qualcomm would do to QCOM stock. But investors likely will be interested in Apple's side of the story - if only for more insight on the battle of Silicon Valley giants.

How to Play AAPL Stock After Earnings

All told, I don't expect much in the way of movement in AAPL stock post-earnings. Any Q2 weakness in the iPhone will be chalked up to consumers waiting for the new release. The rest of the business simply isn't large enough to move the needle. An unexpected decline in the iPad, for instance, doesn't change the long-term outlook for Apple stock.

That said, I do expect some news relative to Apple stock, even if that news doesn't show up in the stock price. Investors will have a lot of questions to ask. Not all will be answered, most likely, but those that are will provide headlines.

Bonus Question: When's That New iPhone Coming Out?

I have a feeling that question will be asked more than once.

As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.

The post 5 Questions Apple Inc. (AAPL) Earnings Should Answer appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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