Apple (AAPL +1.2%) is rising going into today's FQ1 report, and PayPal parent eBay (EBAY -2%) is selling off, after the WSJ reported Apple is hatching plans for a mobile payments service. Point-of-sale hardware vendors VeriFone (PAY -2.3%) and NCR (NCR -2.6%) are also lower.
The report left some major questions unanswered. A big one: Will Apple's service only cover transactions taking place in physical stores, or will it also cover mobile e-commerce transactions?
The latter would be a much larger threat to PayPal, which handled $27B worth of mobile transactions (largely e-commerce-related) in 2013, but for now only has a small presence in the offline payments realm (the company is trying hard to change that).
Given Apple's history, an Apple payments service is unlikely to support Android. That could limit merchant interest in regions where Android has a dominant smartphone share (the EU, Latin America, parts of Asia), assuming Apple plans to take the service overseas.
Analysts expects Apple to report FQ1 EPS of $14.09 (+2% Y/Y) this afternoon, and revenue of $57.46B (+5.4%). Gene Munster believes the Street expects 56M-57M iPhone sales, 24M-25M iPad sales, 4.6M Mac sales, and a gross margin of 37.5% (at the high end of Apple's guidance range).