Bernstein: How many unsold iPhones is Apple sitting on?

And other questions to keep in mind as you listen to Apple’s earnings call next week.

From a note to clients by analyst Toni Sacconaghi that landed on my desktop Friday:

Apple’s January 2 pre-announcement has removed much of the uncertainty surrounding its fiscal Q1 earnings call…

Investor focus now, of course, is on fiscal Q2 (March quarter) revenue guidance. We note that consensus Q2 revenues of $59B appear appropriately conservative vs. history, but the big question is how much iPhone channel inventory Apple built in Q1, and how much it might draw down in Q2. While the company will likely not disclose it, our analysis suggests that a significant inventory build (4 – 5M+ units) and a material drawdown in Q2 (2M+) – i.e., a scenario worse than last year – could still result in downward revisions.

Beyond guidance, we encourage investors to listen for the following on the earnings call:

(1) Commentary on iPhone replacement cycles;
(2) China, and whether recent weakness appears due to cyclical, structural, or nationalist factors;
(3) iPhone softness in other markets, given our contention that China only appears to account for half of the iPhone’s shortfall in Q1; and
(4) Services gross margins, which will be disclosed for the first time (we forecast mid-60s %). We don’t see the latter as a catalyst for the stock.

Maintains Market-Perform rating and $160 price target.

My take: During Apple earnings calls, you can usually count on Sacconaghi to ask about inventory levels.