Earnings Preview

  • Posted: 21 January 2009 09:19 AM #1

    Wow!

    My evening may be a wonderful celebration yet.  Thanks for the hard work and the note of optimism prior to the release of earnings Andy

    - Bob

         
  • Posted: 21 January 2009 09:26 AM #2

    Very entertaining piece Andy. I can imagine Sacconaghi getting very red in the face as he scrolls down your article.

    One thing: Is the TAC number indicative of items produced or items sold? If items sold, then your article truly puts to shame the whole lot of these analysts who estimate iPhone units sold below 5M.

         
  • Posted: 21 January 2009 09:29 AM #3

    nrabinov - 21 January 2009 01:26 PM

    Very entertaining piece Andy. I can imagine Sacconaghi getting very red in the face as he scrolls down your article.

    One thing: Is the TAC number indicative of items produced or items sold? If items sold, then your article truly puts to shame the whole lot of these analysts who estimate iPhone units sold below 5M.

    Just produced.  There’s a whole thread on that on this board with 33 pages in the thread lol.

         
  • Posted: 21 January 2009 09:34 AM #4

    Looking at your Mac numbers, it seems that you are basing the growth off the YoY growth shown by the Gartner numbers in your chart.  However, the number you are using for Q1 ‘08 has the preliminary number for Gartner (1.035 million).  That would indicate a big beat with 21.25% YoY growth.

    However, the preliminary Gartner number from last year was way off their final number of 1159.3 million units.  If you use that as your starting point you only get 8.3% YoY growth which would bring your Mac unit estimate down substantially.  Gartner does revise upwards their numbers sometimes, but it isnt consistent.  They left their December 2006 estimate of 808,000 units unchanged.

    I certainly hope that your Mac estimate of 2.72 million is right, but it doesnt look like a slam dunk.  My own personal estimate is for 2.57 million units for the quarter.

         
  • Posted: 21 January 2009 10:08 AM #5

    convergedw - 21 January 2009 01:34 PM

    Looking at your Mac numbers, it seems that you are basing the growth off the YoY growth shown by the Gartner numbers in your chart.  However, the number you are using for Q1 ‘08 has the preliminary number for Gartner (1.035 million).  That would indicate a big beat with 21.25% YoY growth.

    However, the preliminary Gartner number from last year was way off their final number of 1159.3 million units.  If you use that as your starting point you only get 8.3% YoY growth which would bring your Mac unit estimate down substantially.  Gartner does revise upwards their numbers sometimes, but it isnt consistent.  They left their December 2006 estimate of 808,000 units unchanged.

    I certainly hope that your Mac estimate of 2.72 million is right, but it doesnt look like a slam dunk.  My own personal estimate is for 2.57 million units for the quarter.

    I’m basing it on their initial estimate.  I’m trying to stay consitent across the board.  Gartner adjusts that number post earnings.  So I’m trying to extrapolate based on thier initial estiamte.  But I do have two tables one with adjustments and one with initial estimates.

         
  • Posted: 21 January 2009 11:00 AM #6

    AFB resident analysts getting some well-deserved recognition:

    http://apple20.blogs.fortune.cnn.com/2009/01/21/apple-q1-2009-earnings-smackdown/

         
  • Posted: 21 January 2009 11:27 AM #7

    andyzaky - 21 January 2009 02:08 PM

    I’m basing it on their initial estimate.  I’m trying to stay consitent across the board.  Gartner adjusts that number post earnings.  So I’m trying to extrapolate based on thier initial estiamte.  But I do have two tables one with adjustments and one with initial estimates.

    The problem is that the adjustment for the December quarter of last year was particularly large.  Here are the percentage adjustments for Gartners numbers for Q1 ‘07 through Q1 ‘08.

     
    Gartner
          Adjustment to
          initial estimate
    Q1 ‘07       0%
    Q2 ‘07     2.8%
    Q3 ‘07       0%
    Q4 ‘07     -5.0%
    Q1 ‘08     12.0%

    Since you are basing the growth on the unadjusted numbers it flows through to your final estimate.  If Gartner was as accurate as they were in other quarters, your estimates would be much closer to consensus.  The consensus numbers from the analysts are certainly defendable.  JMO, but I think upside is more likely to come from overseas.  Apple had been seeing very good foreign growth and we dont have as many datapoints about sales in the December quarter.  It is also my perception that notebooks would make up a larger percentage of overseas sales so Apple wouldnt suffer the same hit that they saw in desktops in the US.

    They really need an iMac and Mac Mini update in the March quarter.

         
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    Posted: 21 January 2009 11:35 AM #8

    FWIW, here’s Gene Munster from last night, previewing Apple’s Earnings.

    http://www.cnbc.com/id/15840232?video=1006872451

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    Posted: 21 January 2009 11:52 AM #9

    Andy,

    Thanks for all the hard work.  While I feel your title is sensationalistic and projections will not be met, I think an inline quarter will be viewed as positive like Munster said.

    However, we all know that if there is speck of downside, such as the guidance, there could be blood.  It will not be a blowout relative to the analysts I believe.

    You mentioned some time ago that you were getting a lot of money out of your home to invest in AAPL.  Are you actually committing this money to the stock pre earnings and don’t you think that this is relevant information to post in your article that you hold shares in the stock?

         
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    Posted: 21 January 2009 03:36 PM #10

    Bryan, I recall that Andy commented, in the wake of the Steve Jobs health news last week, that he could no longer countenance investing in AAPL.  He would only trade.  I thought that was an extremely surprising admission on Andy’s part, especially considering how bullish he has been regarding the fundamentals.  I’m curious whether Andy still feels this way and was a little surprised this did not occasion more commentary on the board.

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  • Posted: 21 January 2009 05:55 PM #11

    Well. This was a bad quarter for me and I’ll be the first to admit that I was wrong.  I’ll have to re-evaluate all of my methods and see what works and what does’nt work. 

    -Andy

         
  • Posted: 21 January 2009 07:19 PM #12

    Andy,

    Looks like you got the EPS about right….certainly much closer than the pros.  (And it’s amazing that they keep their jobs after continually missing EPS by 25%+)

    But you were off more than a bit on some of the component #‘s, e.g., mac and iphone unit sales.

    I hope you are able to dissect some of your methods and continue to improve your estimates.

    Thanks for sharing your work!

         
  • Posted: 21 January 2009 07:48 PM #13

    andyzaky - 21 January 2009 09:55 PM

    Well. This was a bad quarter for me and I’ll be the first to admit that I was wrong.  I’ll have to re-evaluate all of my methods and see what works and what does’nt work. 

    -Andy


    Andy, if my memory serves me correctly, you were off on the units numbers in the previous quarter too, but still managed to get the EPS down to within a cent or two. Somehow your estimate figures seem to always balance each other to get an exceptionally accurate bottom line.

    Regarding the iPhone figures - I thought you would off on that (7.11M was too optimistic even for a bullish guy such as yourself), but the the iPods made up for that. The Macs were almost in line. So was the GM.

         
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    Posted: 21 January 2009 07:52 PM #14

    This was another quarter, I believe, where the Street was more accurate regarding units, but Andy et al were closer when it came to $.  So I rather expected today to play out this way: Mac units would probably be in line with Street, but earnings would come in much higher.  In this regard, Andy’s estimates are an invaluable contribution to this board and the Apple shareholder community, at least as useful as the ‘professionals’.  I’m sure Andy will continue to refine his process, and I hope to continue seeing his work here and on the financial sites.

    If I’d placed my faith in Andy rather than the intraday thread’s pessimism, I’d have done much much better today.

    Edtied: what nrabinov said!

    [ Edited: 21 January 2009 07:54 PM by Winterpool ]

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    Ah, love, let us be true to one another! for the world… hath really neither joy, nor love, nor light, nor certitude, nor peace, nor help for pain

         
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    Posted: 21 January 2009 08:06 PM #15

    As expected, eps is 25%-30% above Apple guidance.  As I told Tommu_UK moons ago, getting eps right is no big deal.

    From the list provided by Andy, I noted that Analysts’ consensus is spot-on for Mac and iPhone unit sale.  They miss big on iPod unit sale.

    Unit sale of iPod beats the most optimistic estimate by nearly 10%.  Could this be due to folks buying iPod touch instead of iPhones?  I certainly think so.  However, I couldn’t ascertain this evidence from the summary data provided by Apple.  ASP of iPod for q42008 is $150, for q12009 is $148, not much change.  Thought it would be higher for q12009.  Did Apple make some price changes between the two quarters?  Can’t recall LOL.  Could someone establish quantitative evidence that unit sale of iPod touch is growing fast?

    I would like to reiterate the point I made moons ago that the real story is iPod touch not iPhone.  Most folks can’t afford the data plan for iPhone.  Wi-fi networks are sprouting everywhere fast.

    I wonder why Tim Cook mentions that most of the sales of iPod made in the last week of the fiscal quarter is from overseas.  Overseas Christmas purchases?

    ASP of Macs is slightly up from q42008, probably due to good sales to Europe.

    The only disappointment from the result is international sales account for only 46%, a decline.

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