- 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.
- Carl Icahn mentioned payments as a major growth opportunity for Apple last week, highlighting the company's ability to leverage its 575M+ iTunes accounts, fingerprint sensors, and iBeacon.
- 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).
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