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What Wall Street Expects From Apple Today, And Why It Is So Critical For The Entire Tech Sector

zerohedge.com / by Tyler Durden / Oct 25, 2016 2:34 PM

In the past two quarters, AAPL found itself in an unfamiliar position. The world’s largest company by market, has been – over the past few years – also the biggest contributor to S&P500 and tech sector earnings, and as long as AAPL’s earnings were rising every quarter, this was not a problem. However, starting in Q4 of 2015, Apple found itself in the unenviable position of posting earnings which declined from a year ago. The drop was so acute in Q1 and Q2 that, AAPL alone was responsible for pushing the entire tech sector into the red on a Y/Y basis.

Which brings us to today’s upcoming AAPL earnings announcement, where according to consensus, AAPL is set to report a 3rd straight quarter of annual earnings declines. According to FactSet, for the calendar third quarter (fiscal fourth quarter for Apple), the current mean EPS estimate is $1.66, compared to year-ago actual EPS of $1.96.The last time Apple reported three consecutive quarters of year-over-year earnings declines was Q1 2013 through Q3 2013 (fiscal Q2 2013 through Q4 2013 for Apple).

What may come as a surprise to readers, is that as a result of this projected decline in EPS, Apple is expected to be the largest detractor to expected earnings growth for the S&P 500 Information Technology sector for Q3 2016. The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for the Information Technology sector is 4.2%. Excluding Apple, the blended earnings growth rate for the sector would improve to 10.9%.