Apple's Q3 Was Huge, But Q1 Is The One To Watch

Analyst expectations were higher than ever for Apple Inc. AAPL, which reported its fiscal 2015 third quarter results on July 21.

Global Equities Research analyst Trip Chowdhry was among the analysts who were impressed by the results, but he's even more excited for the first quarter.

"We think the first fiscal quarter, October to December, is going to be very strong on all the core fronts of Apple's product line: Mac, iPhone, iPad and [Apple] Watch," Chowdhry told Benzinga. "All the things come together: new hardware, new software, switching from Android to iPhone, senior citizens coming into the loop."

Rob Enderle, principal analyst at Enderle Group, said the December quarter is "always" Apple's biggest sales period.

"I don't think there's any doubt it will be this time," Enderle told Benzinga. "I just don't think the Apple Watch is going to pick up. It is what it is until they refresh it. The category is failing, [but] the iPhone continues to do very strongly."

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, told Benzinga that investors are spending "way too much time thinking about the Apple Watch right now."

"It's an emerging category," said Moorhead. "I think that what they should be paying attention to is smartphones and maybe paying attention to iPads. I think they're gonna have a knockout [June] quarter with smartphones on the back of the iPhone 6 Plus and iPhone 6."

Looking ahead to the holiday sales period, Moorhead hopes Apple can do something a little different.

"Let's say the S version is more differentiated than prior S [versions]," he said. "Then they can keep the train rolling, meaning this incredible growth that they've been having."

Related Link: Skyworks Solutions' Earnings Results Show A 'Fundamental Strength In Apple'

Subsidies

Enderle is confident Apple's 2015 results will be good, but he is concerned about the future if subsidies are eliminated.

"The big risk for Apple remains with the phone subsidies," said Enderle. "If the government goes ahead and makes the phone subsidies illegal like they are in Europe…that could be a problem."

Enderle said that if domestic customers can't get a new iPhone for $199 (as they have for years), they might feel less inclined to upgrade every year or two.

First Big Indicator

Moorhead thinks the December quarter will provide the first hint of success (or failure) of the Apple Watch.

"I think we'll see the big indication of Apple Watch [sales] in the first quarter when they report on fourth quarter," said Moorhead. "I think Apple Watch will have a good fourth quarter."

Moorhead credited Apple for creating "an incredible amount of demand" before the watch was released but said the company "couldn't fulfill that demand so they stopped marketing it."

"They pulled it out of their stores, the ability to actually pick it up in the stores," he added. "And then by the time they got caught up, there were two-month lead times. And it doesn't matter what it is, in two-month lead times, people stop buying. What I'm expecting is right after the back-to-school timeframe, Apple is going to hit an incredible marketing effort into this and, more than likely…you are going to see an incredible amount of demand for it."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.