Why Apple Will Miss Earnings Even After Selling 20 Million Watches By Next Year?

Apple Inc. AAPL is all set to release its second-quarter earnings report post market closing on Monday, but instead of financials the real excitement on the Street is about the release of numbers concerning the Apple Watch.

Richard Windsor, founder of Radio Free Mobile, was on CNBC recently to discuss the 12 month sales expectation of Apple Watch and what impact it will have on Apple’s stock.

20 Million In 12 Months

“If you look at the range of expectations I mean I have done a [stroll] poll of the industry and clients etc. etc. and some people are expecting less than 10, some people are expecting 100 million,” Windsor said. So, the real answer is that nobody knows. I look at consensus of being round about 50 million. The way things are going I would be looking more like about things coming at about 20 million, I think, for the first 12 months best case.

Earnings Miss

Windsor was asked where would Apple’s stock be in next 6-12 months if the company does manage to sell 20 million Apple Watches. He replied, “Frankly I actually think that’ll be negative for the share price obviously because you would expect it’s going to be a nice high gross margin product.”

“People are expecting it to have a reasonable impact on the operating line and the cash flow so I would expect an earnings miss if my 20 million figure turns out to be right.”

A Watch On Both Wrist?

On whether Apple should have targeted the other wrist instead of the one on which people wear the conventional watch, Windsor said, “No because people are going to feel very foolish wearing two watches whereas you can just about get away with a watch and a wearable with some description”