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
I am trying to get readers to believe that Apple will not disappoint with their forecast. It is so easy for them to meet whisper number of $1.67 if not Q1 2008 of $1.76 so I do not expect them to guide lower.
Unless one is planning to buy either right before, during or after the announcement, no matter what Pete guides, no matter how the market reacts, given the volatility of this current crisis environment, we can expect no price move to last?down can become up quickly, up can reverse just as quickly.
This kind of discussion is very interesting, and in a normal market would be extremely relevant to both longs and traders. But when the DOW gains/loses 300 points in a day, guidance may be the last thing on our minds. GOOG, for example, lost $18 of its AH high on the next trading day. It’s typical for GOOG to move in double digits on a good earnings report or other good news. AAPL hasn’t moved up that dramatically from earnings in almost a year. But even if it does on Tuesday, the trick will be staying at that elevated level for the rest of the week.
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).
I am also at .47 for the Dec Qtr and agree with the .11 AND .14 and .26 now that you clarified.
Iasked this in another thread, but it’s more appropriate here:
Refresh my memory: During the last earnings report, was it the guidance that caused the price to drop, or the suggestion of higher margins due to that “revolutionary product”? I realize that the margins influence the guidance, but in the actual call where was the point when the sell off began?
[quote author=“willrob”]Iasked this in another thread, but it’s more appropriate here:
Refresh my memory: During the last earnings report, was it the guidance that caused the price to drop, or the suggestion of higher margins due to that “revolutionary product”? I realize that the margins influence the guidance, but in the actual call where was the point when the sell off began?
When PO said, “Steve Job’s health is a private matter.” It might not have been the first point, but it was the killer one, IMO.
[quote author=“willrob”]Iasked this in another thread, but it’s more appropriate here:
Refresh my memory: During the last earnings report, was it the guidance that caused the price to drop, or the suggestion of higher margins due to that “revolutionary product”? I realize that the margins influence the guidance, but in the actual call where was the point when the sell off began?
If you can tie the price of a stock to something said at a conference call you are better then I. I think the 1.00 estimate was a disappointment to the street, but the price drop is based on people deciding to sell at a lower price.
[quote author=“pats”]If you can tie the price of a stock to something said at a conference call you are better then I. I think the 1.00 estimate was a disappointment to the street, but the price drop is based on people deciding to sell at a lower price.
This is a good example of the difference in thinking between the trader and the investor. The trader is putting every word said in the call under a microscope, or in front of a bullhorn. When specific words are thrown out there, they become part of a code for the traders to “buy” or “sell”. What the traders leave behind in their wake are what the investors pick up. These are WS traders I refer to, not AFBers.
[quote author=“kiwitrader”][quote author=“pats”]If you can tie the price of a stock to something said at a conference call you are better then I. I think the 1.00 estimate was a disappointment to the street, but the price drop is based on people deciding to sell at a lower price.This is a good example of the difference in thinking between the trader and the investor. The trader is putting every word said in the call under a microscope, or in front of a bullhorn. When specific words are thrown out there, they become part of a code for the traders to “buy” or “sell”. What the traders leave behind in their wake are what the investors pick up. These are WS traders I refer to, not AFBers.
I agree with you kiwi and it is a healthy part of the market, but if you are overly concerned about what will be said at a CC then hedge or sell your position before the call. What happens at the call is like playing roulette it could go for or against you.
[quote author=“pats”][quote author=“kiwitrader”][quote author=“pats”]If you can tie the price of a stock to something said at a conference call you are better then I. I think the 1.00 estimate was a disappointment to the street, but the price drop is based on people deciding to sell at a lower price.This is a good example of the difference in thinking between the trader and the investor. The trader is putting every word said in the call under a microscope, or in front of a bullhorn. When specific words are thrown out there, they become part of a code for the traders to “buy” or “sell”. What the traders leave behind in their wake are what the investors pick up. These are WS traders I refer to, not AFBers.
I agree with you kiwi and it is a healthy part of the market, but if you are overly concerned about what will be said at a CC then hedge or sell your position before the call. What happens at the call is like playing roulette it could go for or against you.
This is an interesting study, looking at how even with AAPL’s conservative guidance, APPL closes lower the next trading day 42% of the time. This means that it closes higher the next day 58% of the time—even with the lower guidance.
Didn’t know the exact numbers - very interesting! But it is in line with my recollection of earnings from the past few years, in that the stock hasn’t always gone south right after earnings like it’s doing lately. It’s the market that’s reacting differently to the same guidance trends.
I don’t think guidance will really matter. If you look at what happened to POT a couple of earnings ago, they had blowout earnings, humongous EPS upgrades, and the stock sold off. People just thought that it would be the last good earnings report for a while.
If we are staring a recession in the face, then people may take a similar stance with AAPL, and not reward good earnings, but instead focus on the recession.
If earnings are rewarded, I doubt the pop will be huge, and it’ll likely get sold in the following day or two.
When specific words are thrown out there, they become part of a code for the traders to “buy” or “sell”. What the traders leave behind in their wake are what the investors pick up. These are WS traders I refer to, not AFBers. 
