Apple's new CEO Ternus likely to get earnings spotlight as strong results loom

Apple investors ​will be keen on getting a closer look at John Ternus as CEO of the iPhone maker ​on Thursday, when it reports quarterly results that Wall Street is expecting to be strong.

Ternus formally takes over from Tim Cook in September, but Apple's decision to unveil the succession days before earnings has convinced analysts that he will join the post-results call.

The former hardware chief, who has overseen some of Apple's biggest ‌bets in recent ⁠years, including ⁠the shift to custom-designed chips for the Mac, is expected to maintain a product-first approach as the company navigates the AI era.


He must decide how far to open ​Apple's tightly controlled ecosystem to keep pace in the artificial intelligence race that has so far rewarded speed and experimentation over curation and control.

"The AI story ​remains one up in the air, but this quarter isn't just about the numbers," said Jay Woods, chief market strategist at Freedom Capital Markets. "Investors will be focused on how leadership change could shape product innovation, capital allocation and Apple's next chapter in AI."

Cook is handing over ​Ternus a company that's been riding one of its strongest iPhone upgrade cycles in ⁠years, with ‌margins that are the envy of the consumer tech world.

The MacBook Neo, which Ternus launched in March, has ​created the kind of ​buzz that few Apple devices have managed in recent years and drawn strong early sales.

At $599, it represents ⁠Apple's boldest move yet to tap the lower-priced laptop market and widen its customer ​base. But it also risks diluting Apple's premium brand and cannibalizing demand for the MacBook Air ​at a lower price point.

Ben Bajarin, CEO at tech consultancy Creative Strategies, said the Neo was potentially a new $20-billion-per-year market for Apple.

"Neo gives Apple a credible product in parts of the notebook market where it has historically been structurally absent, especially education, first-time buyers and value-oriented Windows replacement cycles," Bajarin said.

iPhone sales growth remains robust

Mac sales are expected to edge back into growth, rising 0.8% to $8.02 billion in the January-March period, Apple's fiscal second quarter, according to data compiled by LSEG.

Overall, revenue is expected to increase 15% to $109.66 billion, in line with ‌the holiday quarter, as iPhone sales growth remained almost steady at 22%, rising to $57.21 billion.

The strong iPhone sales defied the decline in the smartphone market in the first quarter, according to IDC, with performance expected to be ​particularly strong in ​China.

Driving iPhone sales is a strong ⁠interest in Apple's iPhone 17 Pro models, which include new technology such as a new chip cooling system that allows the device to hit new performance levels.

Those Pro models also carry a higher price tag, which analysts say could help Apple weather a global memory chip crunch ​that's been pressuring the company's margins.

One of Ternus' signature moves as Apple's hardware chief has been to sharpen distinctions across its product lines and packing top-end models with new features at higher prices, while offering stripped-down, more affordable alternatives.

Analysts expect gross profit margin to widen to 48.4% in the quarter, from 47.1% a year earlier.

"My gut tells me that this (Ternus' appointment) was announced before earnings, so we can focus on a great quarter with strong fundamentals," Ben Reitzes, analyst at Melius Research, said. "Cook was CEO (for) a long time and likely wants to leave on a high note."