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5 Things to Watch in Apple Inc.’s (AAPL) Earnings Report

By U.S. News & World Report

Apple Inc. (ticker: AAPL) is on the docket this week to report its fiscal second-quarter earnings this week, and some investors are downplaying the importance of this announcement in lieu of the looming all-important iPhone 8 release.

Big mistake.

Apple stock has jumped nearly 25 percent so far this year, but more importantly, it has plateaued at all-time highs for roughly a month. AAPL is coiled up and ready to move, and Apple’s second-quarter report — due out after Tuesday’s bell — is the likeliest catalyst for some sort of breakout (or breakdown).

The headline numbers. Investors are looking for decent growth out of Apple for its fiscal second quarter, including a 6.3 percent uptick in earnings to $2.02 per share and a 4.8 percent increase in revenues to $53 billion. For the first time in some time, those figures benefit from some favorable comparables. If you remember, the second quarter of 2016 was Apple’s first quarter of revenue contraction in 13 years, as well as the first time ever that iPhone sales had declined.

The iPhone 7. The iPhone still is the single-biggest generator of Apple’s revenue, so where the iPhone goes, AAPL goes. That could be a mixed bag this quarter. Data from research firm IDC pegs Apple’s iPhone shipments at 51.6 million, up just 0.7 percent. However, Needham’s Laura Martin is much more optimistic, estimating more than 4 percent growth to 53.35 million units. But also important is the product mix of those units. Recent data from Consumer Intelligence Research Partners shows that the iPhone 7/7 Plus combo made up 68 percent of total iPhone sales for the quarter ending April 1, versus 70 percent for the iPhone 6s/6s Plus combo a year ago. Moreover, older iPhone models were better selling in the first quarter than prior years. Both these factors could jeopardize average selling price.

[Read: Apple Could Become the Next Great Dividend Stock,]

The iPhone in China. A specific slice of iPhone sales data to watch for is Chinese sales. Annual revenues from the Apple’s second largest market declined for the first time in 2016, and it wasn’t just a slip — they plunged 23 percent to 44.9 million units. Local companies including Huawei and rapidly expanding Oppo are gnawing into Chinese iPhone performance, and continued difficulties there won’t just be disappointing — they could also drag on just how optimistic investors should be about the big iPhone 8 release.

How’s that services division? The services division is becoming to Apple what Amazon Web Services has become to Amazon.com ( AMZN) — it’s not the biggest slice of the pie, but it’s a fast-growing area of the business (Tim Cook sees revenues doubling by 2020) and offers high margins. In the fiscal first quarter, services revenues — which include sales from iTunes, Apple Pay, App Store and other services — jumped 18 percent to $7.2 billion and accounted for 9 percent of revenues. In fact, Services is now a bigger contributor of revenues than the iPad division. From a pure dollar perspective, unexpected weakness here won’t kill Apple, but it could provide a significant drawback in sentiment, especially if paired with weak iPhone sales.

More cash for investors. Apple is due for an increase to the dividend this quarter, and RBC Capital’s Amit Daryanani, who currently has an “outperform” rating on AAPL stock, believes the company will hike the dividend by 15 percent. That would imply a quarterly payout of 65 or 66 cents, equating to a 1.8 percent yield at current prices. He also sees the company raising its buyback program from $30 billion to $35 billion.

A few final notes as we head into Tuesday’s report:

— Don’t sweat the Apple Watch. This unit isn’t broken out separately and is just part of the “Other” division that also includes Beats, Apple TV, iPods and accessories. This division as a whole accounted for just 5 percent of revenues last quarter. The problem? The Apple Watch already accounts for roughly 80 percent of revenue in the smartwatch market — and growth estimates in this overall segment continue to be hacked. A successful Apple Watch is nice, but ultimately not very material.

— News and updates about upcoming iPhone releases tend to come separately, so don’t expect to hear much on the iPhone 8 front.

More earnings in focus

Tesla (TSLA). Tesla is perhaps the most interesting situation among the big-name earnings reports. TSLA shares are up 47 percent year-to-date and closed Friday just off all-time highs set intraday. The company already announced better-than-expected first-quarter deliveries back in April, and Piper Jaffray excited the bulls further with an upgrade to “buy” and a 65 percent price-target hike. But the situation heading into Wednesday night’s report is setting up similarly to the sell-the-news reaction in February, when it reported Street-beating fourth-quarter revenues and smaller-than-expected losses. Tesla does have a big bar to clear, with analysts estimating a 127 percent boom in sales, filtering down to a 44 percent narrower loss to 81 cents per share.

[Read: Elon Musk Is Determined to Change the World.]

Fitbit (FIT): Fitbit finds itself in a polar-opposite situation, from a sentiment standpoint. Investors have sold FIT shares off more than 20 percent this year, continuing a nearly 90 percent slide from their August 2015 peak. Meanwhile, reports now say its much-anticipated GPS smartwatch has suffered massive delays and won’t be released until fall. Fitbit also is mired in a PR battle over a woman’s recent report that its Flex 2 malfunctioned and exploded while it was on her arm, with the company arguing that “external forces” damaged the device. However, the fitness tracking specialist has an extremely low bar for Wednesday night’s earnings report, with analysts looking for the company to flip from a 10-cent profit to a 19-cent loss on a 44.4 percent decline in revenues to $280.8 million. So don’t count out a dead-cat bounce on a significant beat.

This week’s earnings calendar

Monday. Advanced Micro Devices ( AMD), Cardinal Health ( CAH), Dish Network Corp. ( DISH),

Tuesday. Akamai Technologies ( AKAI), BP PLC ( BP), Coach ( COH), ConocoPhillips ( COP), CVS Health Corp. ( CVS), Etsy ( ETSY), FireEye ( FEYE), First Solar ( FSLR), Gilead Sciences ( GILD), Lumber Liquidator Holdings ( LL), MasterCard ( MA), Merck & Co. ( MRK), Pfizer ( PFE), Mondelez International ( MDLZ), Twilio ( TWLO)

Wednesday. American International Group ( AIG), Angie’s List ( ANGI), CenturyLink ( CTL), Clorox Co. ( CLX), Facebook ( FB), Groupon ( GRPN), Kraft Heinz Co. ( KHC), Metlife ( MET), Reynolds American ( RAI), Southern Co. ( SO), Sprint Corp. ( S), Square ( SQ), Transocean Ltd. ( RIG), Yum Brands ( YUM)

Thursday. Activision Blizzard ( ATVI), Cabela’s ( CAB), Chesapeake Energy Corp. ( CHK), Kellogg Co. ( K), LendingClub Corp. ( LC), Royal Dutch Shell ( RDS/A), Shake Shack ( SHAK), Viacom ( VIAB), Zillow Group ( Z)

[See: 7 of the Best Stocks to Buy for 2017.]

Friday. Cigna Corp. ( CI), TransCanada Corp. ( TRP)

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5 Things to Watch in Apple Inc.’s (AAPL) Earnings Report originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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