Not to jump too far off topic, but can someone just quickly let me know how estimates for the Dec quarter are coming in below last years EPS numbers?  What is shrinking the margins so much that wasn’t present last year?

The concensus forecast for Q1 EPS is $1.66. Last year real Q1 EPS was $1.76. I do not think Apple expects less sales that last year.  With more Macs, iPhone revenues, and as many iPods, it would be logical to guide for more that $1.80
What worries me most is loss on Apple 11 billions short term investments and the cost of production investments for the new macBook line.
I am really anxious but I do not anticipate a sell off after Q4 results.

[quote author=“Hamourabi”][quote author=“willrob”] ... I’m going to guess that at least 85% of the members here anticipate the share price will go down despite Apple reporting another record breaking quarter ... ... I am really anxious but I do not anticipate a sell off after Q4 results.

Sell off after earnings announcement is almost as certain as sun rising from the East.  What is unpredictable is would AAPL continue to decline from Wednesday to Friday or stage a rebound.

While Apple don’t expect to earn less than last year, guidance should be below consensus.  Deagol estimates $2.02, 25% off (uPod) is $1.52, below analysts’ consensus of $1.67.  What do you think Mr Market would do if Apple reverts to previous practice of giving 50% uPod?  $1.01 sounds good to you?

[quote author=“Mace”]Sell off after earnings announcement is almost as certain as sun rising from the East.  What is unpredictable is would AAPL continue to decline from Wednesday to Friday or stage a rebound.

It may depend on the amount of the sell off, which in turn will depend on the gains/losses on Monday and Tuesday, which in turn depends on Asian, European and US futures markets… Paulsin, Bush, Fed, etc. And of course on whatever Eric does.

[quote author=“Mace”][quote author=“Hamourabi”][quote author=“willrob”] ... I’m going to guess that at least 85% of the members here anticipate the share price will go down despite Apple reporting another record breaking quarter ... ... I am really anxious but I do not anticipate a sell off after Q4 results.

Sell off after earnings announcement is almost as certain as sun rising from the East.  What is unpredictable is would AAPL continue to decline from Wednesday to Friday or stage a rebound.

While Apple don’t expect to earn less than last year, guidance should be below consensus.  Deagol estimates $2.02, 25% off (uPod) is $1.52, below analysts’ consensus of $1.67.  What do you think Mr Market would do if Apple reverts to previous practice of giving 50% uPod?  $1.01 sounds good to you?

Last year Q1 guidance did top concensus estimate and there was no immediate sell off (it waited until early november though )

[quote author=“Hamourabi”]
Last year Q1 guidance did top concensus estimate and there was no immediate sell off (it waited until early november though )

Yes, I had almost forgotten about that rare occasion when Peter spoke in tongues. I suppose it could happen again, but in this economic climate I’d expect some caution on his part. But also, in this same climate, if he did offer some optimism the share price could shoot through the roof (leaky as it may be).

How bout the the quarter before last? anticipate that guidance @ $1.00. ? Guidance for 1Q09- I’m guessing about a dollar. PO must have watched Rain Man one too many times. About a dollar… About a dollar….

“Ray, how much does a candy bar cost?” ... “About a hundred dollars”  ...  “A new car?”... “About a hundred dollars”  A hundred dollars

How bout the the quarter before last? anticipate that guidance @ $1.00. ? Guidance for 1Q09- I’m guessing about a dollar. PO must have watched Rain Man one too many times. About a dollar… About a dollar….

“Ray, how much does a candy bar cost?” ... “About a hundred dollars”  ...  “A new car?”... “About a hundred dollars”  A hundred dollars

KMart sucks. 

Look for a spike in cash and short term investments. This will come as Apple receives the cash from Telcos subsidising the 3G iPhone. Also cash expenditure for NAND may be low as Apple had $543 million in NAND flash memory prepayments as at end of June08 quarter. This cash should help to support Apple’s share price - unless analysts discount cash or Apple has bought CDS’s.
  [removed]emoticon(’:oops:’)

1

[quote author=“pats”]

Mercel which quarters are you referring to?  With the subscription accounting you can be sure that a Iphone sold during the 3rd Qtr will have a greater impact on the 4th qtr.  The Iphone revenue book is 1/720 per day so an Iphone sold on the last day of the quarter will have 90/720 of revenue in the 4th Qtr vs 1/720 in the 3rd Qtr.  If we assume straight line sales then the 4th Qtr revenue will double for the phones sold in the 3rd Qtr.  Going back to previous discussion I am using $225 average for COGS and average selling price of $549 which is a $324 per phone and a 59% Gross margin. By my calculations the iphone is way more profitable then any other device in Apples line up.  I don’t get how Apple will get to 30% GM with the Iphone becoming a bigger portion of revenue thus moving GM up.

I’ll update my EPS on iPhone revenue later (stuff on a different mac).  But one point:  Everyone assumes there will be a drop after ER.  And it would be a fairly safe bet given history.  However, this could be the exception that proves the rule.  My reasons:
1.  Cook & Oppie are smart guys.  Apple gives conservative guidance because they don’t want to miss.  Why? They don’t want the stock to get hit.  The stock is plenty beaten up NOW.  I think to protect what’s left of the PPS, he will avoid ultra-conservative for Q1. 
2.  Apple execs KNOW stores are humming post-crash.  They KNOW what other products, unannounced, are in the pipeline to help with Q1.
3.  MacBooks and MacBook Pros show a very promising beginning and this economy is NOT going to cancel Christmas.  Computer retail is not auto retail.
4.  Finally, it has happened before that the stock did not dive post ER. This could be the time to expect the unexpected.

I think we repeat the Buy on rumor/Sell on news so much it has become hypnotic.  Maybe we won’t wake up this time, but it’s worth pointing out that Apple doesn’t blithely give guidance without regard to PPS.  They could pleasantly surprise us this time.  And maybe not…

Edit: Grammar

[quote author=“pats”]

Mercel which quarters are you referring to?  With the subscription accounting you can be sure that a Iphone sold during the 3rd Qtr will have a greater impact on the 4th qtr.  The Iphone revenue book is 1/720 per day so an Iphone sold on the last day of the quarter will have 90/720 of revenue in the 4th Qtr vs 1/720 in the 3rd Qtr.  If we assume straight line sales then the 4th Qtr revenue will double for the phones sold in the 3rd Qtr.  Going back to previous discussion I am using $225 average for COGS and average selling price of $549 which is a $324 per phone and a 59% Gross margin. By my calculations the iphone is way more profitable then any other device in Apples line up.  I don’t get how Apple will get to 30% GM with the Iphone becoming a bigger portion of revenue thus moving GM up.

I pulled .11 and .14 for Q2 and Q3 of 2008, after tax.  My prelim Q2 and Q3 for 2009 is estimated at .64 and .78, respectively, after tax.  I think Q1 for iPhone profit recognized will give the Apple Execs some flexibility with guidance next Tuesday (I have it at .47 EPS contribution).  Will proofread this tomorrow.  FWIW, I have iPhone contribution to net income for Q4 2008 at .26 (again, all is after tax).

[quote author=“Mercel”]

I pulled .11 and .14 for Q2 and Q3 of 2008, after tax.  My prelim Q2 and Q3 for 2009 is estimated at .64 and .78, respectively, after tax.  I think Q1 for iPhone profit recognized will give the Apple Execs some flexibility with guidance next Tuesday (I have it at .47 EPS contribution).  Will proofread this tomorrow.  FWIW, I have iPhone contribution to net income for Q4 2008 at .26 (again, all is after tax).

With your estimate of .47 EPS from iPhone contribution for Q1 (although I am sure it will be much higher) I see no reason why Apple will disappoint with their Q1 forecast. To reach $1.67 they only need $1.20 from the other items. In Q1 2007 Apple’s EPS was $1.14 on the sales of 1.6 million Macs, 21 million iPods AND NO iPhones. Can they reach $1.20 or more in Q1 2009? No reason to doubt it especially with the introduction of new Notebooks and new iPods.

[quote author=“MacOz”][quote author=“Mercel”]

I pulled .11 and .14 for Q2 and Q3 of 2008, after tax.  My prelim Q2 and Q3 for 2009 is estimated at .64 and .78, respectively, after tax.  I think Q1 for iPhone profit recognized will give the Apple Execs some flexibility with guidance next Tuesday (I have it at .47 EPS contribution).  Will proofread this tomorrow.  FWIW, I have iPhone contribution to net income for Q4 2008 at .26 (again, all is after tax).

With your estimate of .47 EPS from iPhone contribution for Q1 (although I am sure it will be much higher) I see no reason why Apple will disappoint with their Q1 forecast. To reach $1.67 they only need $1.20 from the other items. In Q1 2007 Apple’s EPS was $1.14 on the sales of 1.6 million Macs, 21 million iPods AND NO iPhones. Can they reach $1.20 or more in Q1 2009? No reason to doubt it especially with the introduction of new Notebooks and new iPods.

Exactly.  Apple can low ball last year’s EPS guidance (discounting for FUD in the economy at large) and tack on iPhone EPS contribution for Q1 and surprise everyone.  If there was ever a chance for buying on the news (vs. selling), this could be it.  I guess we will see soon enough.

[quote author=“MacOz”][quote author=“Mercel”]

I pulled .11 and .14 for Q2 and Q3 of 2008, after tax.  My prelim Q2 and Q3 for 2009 is estimated at .64 and .78, respectively, after tax.  I think Q1 for iPhone profit recognized will give the Apple Execs some flexibility with guidance next Tuesday (I have it at .47 EPS contribution).  Will proofread this tomorrow.  FWIW, I have iPhone contribution to net income for Q4 2008 at .26 (again, all is after tax).

With your estimate of .47 EPS from iPhone contribution for Q1 (although I am sure it will be much higher) I see no reason why Apple will disappoint with their Q1 forecast. To reach $1.67 they only need $1.20 from the other items. In Q1 2007 Apple’s EPS was $1.14 on the sales of 1.6 million Macs, 21 million iPods AND NO iPhones. Can they reach $1.20 or more in Q1 2009? No reason to doubt it especially with the introduction of new Notebooks and new iPods.

not sure why you are quoting 2007 first quarter earnings when I think the relevant number is Q1 2008 which came in at $1.76

In January, when Apple crashed after earnings, it followed in the same mysterious (at the time) pattern that Google’s earnings took. We now have a pretty good idea what happened back then.

Can we extrapolate and conclude that this quarter’s report, during which Google shot up like a rocket ($81 up from its low of the day) can lead to a similar result for AAPL? Google had become a coiled spring (Tommo’s term) due to its selling off all day and then starting to climb rapidly in the last 40 minutes or so.

Perhaps this same pattern can be watched for on Tuesday. It’s unlikely Apple will miss its earnings, and with the iPhone numbers coming in, we could see such a rocket take off, especially if the share price is driven down during the day (and on Monday) by external market forces (or Bush or Paulsin making a speech).

Of course, as the title of this thread suggests, the guidance will still be important. Googel’s choice of not giving guidance left nothing to interfere with their rocket’s take off. But Oppenheimer may end up being the lead weight on on rocket’s tail.