Hey all,

In the past, we’ve seen some substantial drops following quarterly earnings reports.  Many of us have felt that this is due, perhaps largely, to Apple’s tendency to be ultra-conservative about the upcoming quarter(s). 

Here we come up on another quarterly report, and it’s difficult for me to imagine how Apple could spin the upcoming quarter as anything other than a total blockbuster.  After all, we have:

1) Christmas quarter
2) Mac sales already through the roof, Christmas quarter should be bigger due to Leopard-equipped computer sales
3) The release of Leopard to drive a) software sales, b) Mac sales, c) iPhone developments?
4) iPhone sales already crazy, now fueled by lower price point and international sales
5) New iPod lineup.  iPod Touch going crazy.  Nano’s going crazy.  Through the roof for the Christmas season.
6) Rumored TabletMac.

So, temper my thinking.  What can go wrong with guidance this quarter?

Re: Upcoming guidance: What can go wrong?

[quote author=“johnnyvn”]Hey all,

In the past, we’ve seen some substantial drops following quarterly earnings reports.  Many of us have felt that this is due, perhaps largely, to Apple’s tendency to be ultra-conservative about the upcoming quarter(s). 

Here we come up on another quarterly report, and it’s difficult for me to imagine how Apple could spin the upcoming quarter as anything other than a total blockbuster.  After all, we have:

1) Christmas quarter
2) Mac sales already through the roof, Christmas quarter should be bigger due to Leopard-equipped computer sales
3) The release of Leopard to drive a) software sales, b) Mac sales, c) iPhone developments?
4) iPhone sales already crazy, now fueled by lower price point and international sales
5) New iPod lineup.  iPod Touch going crazy.  Nano’s going crazy.  Through the roof for the Christmas season.
6) Rumored TabletMac.

So, temper my thinking.  What can go wrong with guidance this quarter?

Remember numbers can be spun almost ANY way you choose ... for example if Apple were to sell 1.9 million macs ..

“APPLE MISSES TARGET FOR COMPUTER SALES”  Pure Bull$#@#  But it could be spun that way .... remember some have mentioned and hoped for a 2 million mac quarter ..... nevermind that they are gaining market share or selling more computers this quarter than at any time in their history ... that makes for boring headlines .. the talkingheads need a headline and negative usually sells better than postitive news.

I think Apple will have a record quarter but how will it be spun ?  That is the ultimate question .

Longer term people will realize what is going on but as long as I’ve been in APPL I’ve usually been dissapointed with the share price after earnings (short term) .... let’s hope this trend ends .....  once again we plead :

APPLE PLEASE GIVE REASONABLE GUIDANCE OR NONE AT ALL !!!!!!!!!!!!!!!!

I don’t see anything changing in this regard.

First of all in their description of the announced quarter they will proudly say it is a historic quarter in Mac sales, the new iPods are selling like hotcakes, and the iPhone cotinues to be rolled out with very little slowdown in sales, etc.,

BUT to the street it’s all about forward guidance and Apple will in some way say something slightly negative - “costs are likely to rise for components reducing margins”, “product transitions are continuing”, “subscription accounting on further items”, etc.,  that the negativists will pounce on - “see, they’re not doing so great”. 

They will continue to forecast EPS at least 15% below reality.

Short term it could slightly slow the stock down, long term it doesn’t seem to matter - lesson to self, don’t try to play the earnings announcement game.

Re: Upcoming guidance: What can go wrong?

[quote author=“Gtrplyr”]
Remember numbers can be spun almost ANY way you choose ... for example if Apple were to sell 1.9 million macs ..

“APPLE MISSES TARGET FOR COMPUTER SALES” 

But that type of announcement is for the just-concluded quarter and doesn’t really address what could go wrong with the forward guidance they give for the upcoming quarter(s), and especially for the all-important Christmas quarter.  JimLongo has conjectured things like parts pricing.  Yes, possibly.  But product transitions, no, because we’ve just seen all of them (new iPods, iPhone and most Macs are very early in their product cycles).  Bottom line, I’m thinking that this quarter in particular, there’s not much to grouse about in terms of guidance. 

Anyone else have ideas?

I don’t see Apple changing its guidance strategy this quarter. I do see a blockbuster December quarter. I’m not concerned about guidance. I’m concerned about the September quarter results and the number of Mac units sold.

I think any correction( I mean retractment of….) share price will happen in late January 08. The market will want to gathher its thoughts before advancing again. This has been a very heady year and I think some retractment of the share price will be positive for AAPL. It’s been pushing hard on the upper limits of its Bollinger for some time now.

I think we will see a chart similar to the one in 06 except the retractment will be shorter and more reflective in nature rather than being tentative - the message about Apple is cementing.

I don’t see them changing their strategy either, but in regards to the guidance for the Christmas quarter, WHAT IS THERE TO “COMPLAIN” ABOUT?  In the past, they’ve said “product transitions”, “slowdown in sales due to release of xxx”, etc.  There’s nothing major like that upcoming with this quarter!  I mean, if they were truthful, they’d say “Well, we expect the biggest quarter in Apple history…we’re firing on all cylinders…iPhone sales far beyond our expectations…Mac sales through the roof”, etc.  But, alas, we know they’re not going to say those things.  But, what will they have to caution about for the next 90 days?

I don’t see them changing their strategy either, but in regards to the guidance for the Christmas quarter, WHAT IS THERE TO “COMPLAIN” ABOUT?  In the past, they’ve said “product transitions”, “slowdown in sales due to release of xxx”, etc.  There’s nothing major like that upcoming with this quarter!  I mean, if they were truthful, they’d say “Well, we expect the biggest quarter in Apple history…we’re firing on all cylinders…iPhone sales far beyond our expectations…Mac sales through the roof”, etc.  But, alas, we know they’re not going to say those things.  But, what will they have to caution about for the next 90 days?

I don’t look for anything very negative, and certainly the Christmas quarter’s performance will overshadow guidance.  If you examine earnings reports for Apple over the last few years you’ll see some large drops after earnings (April 2006 comes to mind), but not for the Christmas quarter.  Apple usually adds another 10% or so after this earnings report before the end of the year.

We don’t know if there will be any product transitions…yet.

Well there still is some chatter about the supposed failure of Apple TV so that would be a negative point.  And possibly the death of the MacMini.  I doubt if many people are buying MacMinis so that can also be seen as a negative thing.
I believe Scott Moritz was saying something about Apple coming out with a NAS storage solution and it’s not likely to be a mainstream product.  Apparently Apple must keep coming up with spectacular products in order to keep it’s stock price moving up. 

I have a pre-gigabit Ethernet Airport Extreme Base Station N and I haven’t heard whether Apple is moving either version in any large numbers.

If analysts look hard enough at Apple’s whole product line they can always find something to complain about if it isn’t selling as well as expected.

It appears they don’t look at RIMs product line the same way.  I’m sure they must have BlackBerry models that don’t sell all that well, but I hadn’t heard any analyst complaints about that.  (Sorry for throwing in this RIM part but it seems to be a company with no negatives in the eyes of analysts)

Ok .. how about this one ?

Apple will sell so many iPods, iPhones, iMacs, Macbook Pros etc ... over Christmas that no one will have any money to buy anything for the next 2 quarters .... Apple will have to layoff thousands ... close stores ....  it will be a disaster ..

SELL SELL SELL .....

I don’t think sales of the Apple TV or the mini matter in the results.

However, I expect we will see an upgrade to the Apple TV before the end of October.

Strangely enough whenever I check amazons top desktop sales link Mac Mini is in the top 10

http://tinyurl.com/3x4g6k

I don’t think sales of the Apple TV or the mini matter in the results.

However, I expect we will see an upgrade to the Apple TV before the end of October.

I agree an update is likely soon.  I noticed that Apple TV is now being sold at Costco. Unfotunately the display case was full.  I have also noticed that the Apple TV displays at AAPL stores are usually vacant

I like the Apple TV concept but to date it has been a flop IMO.  Fortunately as many have pointed out - it is not (to date) an important driver of Apple earnings growth.

I think the importance of the Mac mini is underestimated.  Psychologically I think it is important for Apple to have a low cost headless Mac - if only to give an easy path for switchers.  IMO discontinuation of the Mini would be a big mistake unless they simulaneously release a mini tower or some other low cost headless form factor.

[quote author=“mtdoc”]
I like the Apple TV concept but to date it has been a flop IMO.  Fortunately as many have pointed out - it is not (to date) an important driver of Apple earnings growth.

I think the failure of the AppleTV has been entirely at the feet of the content providers. They DO NOT want Apple to have the same perceived “stranglehold” over their material that Apple has over the record companies.

I don’t think sales of the Apple TV or the mini matter in the results.

However, I expect we will see an upgrade to the Apple TV before the end of October.

I agree an update is likely soon.  I noticed that Apple TV is now being sold at Costco. Unfotunately the display case was full.  I have also noticed that the Apple TV displays at AAPL stores are usually vacant

I like the Apple TV concept but to date it has been a flop IMO.  Fortunately as many have pointed out - it is not (to date) an important driver of Apple earnings growth.

I think the importance of the Mac mini is underestimated.  Psychologically I think it is important for Apple to have a low cost headless Mac - if only to give an easy path for switchers.  IMO discontinuation of the Mini would be a big mistake unless they simulaneously release a mini tower or some other low cost headless form factor.

I’d like to see the mini sold at Costco. I do expect an Apple TV upgrade before the end of the month (at the latest mid-November). I want the upgraded product in my home at Christmas.