So if Apple is expected to sell more iPhones overall, and more at a higher price, why would it be cutting production? Did it just overestimate how "super" the "supercycle" of upgrades would be? That's the mystery Apple will have to address on Thursday.
Apple only traditionally provides forward guidance on a couple of numbers: revenue, gross margin, operating expenses, other income and tax rate. That leaves Wall Street trying to piece together the rest.
Revenue, gross margin and operating expenses may be the only areas where analysts can get clues for the March quarter and beyond — the other two areas may be affected by Apple's recent announcements that it would pay tax on overseas cash and up domestic investments.
According to FactSet, revenue for the current quarter is expected to be about $66.54 billion. On average, Apple has beat its sales guidance by about 3.3 percent over the past 3 years, FactSet says.
But how the market will interpret those numbers is yet to be seen.
"How significant can that shortfall be, and will the stock be negatively impacted as a result?" Bernstein analyst Toni Sacconaghi asked on CNBC's "Fast Money: Halftime Report" last week.
"While units could be considerably weaker, the market may be underestimating how strong average selling prices are," Sacconaghi said. "So when I'm talking with investors, the debate is: You know, revenues might not go down as much as units. So if units are 5 or 10 percent weaker than people think, perhaps revenue is only maybe a little bit weaker. And when you add in a lower average tax rate, earnings for the year are actually probably going up. So how does the market react to that?
In some senses, people may say, 'Wow, this is a super cycle and they're only going to get 3 percent to 5 percent unit growth this year? That's not good.' Others may say, 'It's not a super cycle, but they're getting very strong pricing on the new units. And earnings per share are actually going to be higher than we thought. Maybe that's ok. And that's really the debate that's happening in the investment community right now."