After the close of regular market trading today, Apple (AAPL) is set to report earnings for its fiscal third quarter, ended June 2015. Wall Street is expecting the company to earn $1.81 a share on revenues of $49.3 billion for the quarter. For the September quarter, current estimates are $1.86 a share on revenue of $51 billion. The company's flagship product, the iPhone, has a wide range of sales estimates -- from 46 million units sold to as high as 53 million, with a consensus of 47 million. Analysts estimate the company has sold between 8 million and 12 million iPads, with a consensus of around 9.3 million. Wall Street has modeled, at consensus, 5 million in Mac and 4 million in Apple Watch sales.
Apple stock has been in stasis for the last five months -- bouncing within a 10-point range, with no significant upward movement. In fact, it has been spinning its wheels a lot longer than that.
If you have been a long-term shareholder of Apple -- say you bought shares back in September of 2012 when AAPL first hit triple digits (on a post-split basis) and closed on Sept. 17, 2012, at $100.01 -- in the past three years you would have been up a mere 32%. Nothing to write home about, is it? And it gets even worse. Since that day in September 2012, the Nasdaq is up over 60%. Even Google (GOOGL), which everyone was complaining about until last week -- including yours truly -- is up 89% over the same timeframe. Not good at all for Apple shareholders.
Let's dig a little deeper into Apple's products timeline. Until Oct. 23, 2001, Apple was known only for its Mac iBooks and PowerBooks ¿ it was essentially a high-end PC maker. On that day in 2001, the company launched its first-generation iPod, which would soon change the face and fortune of the company.
In 2004 came the first iPod Mini and the fourth version of the iPod. Then on June 29, 2007, Apple launched its first iPhone, which, in essence, was an iPod that could make calls and receive texts and emails. On April 3, 2010, the company unveiled the iPad with Wi-Fi -- essentially a much-bigger iPhone. Finally, on April 24 2015, the company unveiled the Apple Watch -- which is basically a tiny iPad. And that is the major product-launch timeline in a nutshell.
Look, ours is an Apple household -- I have lost count of how many iPods, Macs, MacBooks, iPhones, iPads and Apple TVs we have purchased over the last decade. But I am calling a spade a spade as far as the product launches are concerned: new product developments have been incremental, not monumental. Where is the new-new?
What Apple needs to do tonight is show investors how it stands up and delivers a reason for investors to buy -- no questions asked. Enough pandering to the denizens of the music world and cavorting on stage with the likes of Bono. Building a spaceship campus is very cool, but that offers nothing to shareholders. It almost seems like Apple has gone beyond even Hollywood on us, to, heaven forbid, Bollywood.
Management needs to remember that they are spending our money -- not their own.
The company needs to show its value tonight. Show us judicious and much-needed expense management and control -- à la Google. Show us the ability to deliver better-than-expected gross margins and operating margins. Show us numbers that wildly exceed Street expectations -- à la Netflix (NFLX). Show us anything. But, market capitalization notwithstanding, give investors an indisputable reason to buy the shares.
In terms of how I am positioned going into the earnings event, I am long -- with added leverage via long calls and short puts.