AAPL Apple Inc

By Steven Russolillo 

A key streak for Apple Inc. is coming to an end.

When the technology stalwart unveils its fiscal fourth-quarter results on Tuesday, its annual revenue and net income are expected to log a drop for the first time since 2001. Innovations such as the iPod, iPhone and iPad have led Apple's revenue to surge more than 40 times over that 14-year period, catapulting Apple to the world's biggest company by market value.

Apple is expected to record $215.6 billion in revenue for its fiscal year ending Sept. 24. That is more than Greece's entire gross domestic product. But it would also be down about $18 billion, or 8%, from a year ago. That decline, alone, would be about triple Apple's total revenue in 2001.

That hasn't stopped investor sentiment from improving in recent months. And just like in July, when Apple's results exceeded Wall Street's diminished expectations, the company's coming results have another low bar to clear.

Analysts polled by FactSet estimate earnings of $1.66 a share for the fiscal fourth quarter. That forecast was $2.11 at the beginning of the year, but has fallen ever since. The consensus forecast from Estimize, which crowdsources earnings estimates from buy-side analysts, hedge-fund managers and others, is slightly higher at $1.71 a share.

Sales of the iPhone, which make up roughly two-thirds of overall revenue, are the key figures to watch. Results will include the new iPhone 7 and 7 Plus, which were released with two weeks left in Apple's quarter. Apple didn't provide early sales figures, but evidence points to decent demand. It could get an additional boost following Samsung Electronics Co.'s exploding smartphone devices and ensuing product recall.

Apple investors shouldn't expect a repeat of this year's fortuitous events. The next iPhone is expected to debut in fall 2017, marking the 10th anniversary of the device. Expectations are high that the new phone will be a game changer. Analysts are modeling Apple's overall revenue will regain steam in 2017, growing 5% from a year earlier.

Apple shares have risen more than 25% since the July earnings report. Solid sales numbers for the iPhone could boost them further. Fetching 13 times projected earnings projected over the next 12 months, Apple's multiple remains far cheaper than those of Alphabet Inc., Microsoft Corp., Amazon.com Inc. or Facebook Inc., which round out the top five biggest S&P 500 companies by market value.

The good times may last a while, but Apple will face higher and harder-to-beat expectations in the coming quarters.

(END) Dow Jones Newswires

October 24, 2016 14:32 ET (18:32 GMT)

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