​Apple's Q2 expected to get China iPhone boost

Apple's fiscal second quarter boils down to two words: iPhone and China.

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Apple is expected to report another quarter of massive profits courtesy of iPhone sales. And those sales are largely expected to be fueled by popularity in China.

The company, which just launched the Apple Watch, is expected to report a second quarter profit of $2.16 a share on revenue of $56.06 billion. That sum is down from Apple's seasonally strong December quarter. Analysts are expecting the June quarter to have revenue of about $47.06 billion due to the pre-iPhone product cycle lull.

One thing is clear about Apple's financial results: The iPhone drives earnings. The other certainty: China is driving iPhone sales.

Stifel analyst Aaron Rakers is projecting Apple to sell 59.6 million iPhones in the second quarter. The consensus estimate is 54.9 million iPhone units.

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Rakers said in a research report:

We believe Apple's iPhone results within China represent the most significant swing factor in upside for the March quarter. Apple reported a 2x year over year increase in iPhone sales in China during the December quarter. Gartner (sell-thru) and IDC (sell-in) estimated Apple's iPhone shipments at ~13.5M and ~13.2M iPhones in the calendar fourth quarter of 2014, respectively. Apple had reported it did not attain supply/demand balance until January, we believe leaving us to consider channel fill impacts during the March qtr, especially within China as we continue to see strong 4G TD-LTE adoption.

Rakers' take is interesting given that smartphone shipments in China are expected to be lower than expectations in the first quarter. However, Apple's iPhone 6 and iPhone 6 Plus are selling well.

Cowen analyst Timothy Arcuri also said China is critical to the iPhone's second quarter results. China Mobile added 53 million LTE connections in the first quarter and that should drive the iPhone.

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To be sure, there will be lots of talk about the Apple Watch and new Macs. In addition, there will be some chatter about how the iPad has legs in the enterprise.

But in the end, there are only two words that matter financially. Those words are China and iPhone.