Apple’s $65 billion Fiscal Year

  • Posted: 16 May 2010 12:40 AM

    My latest posting at Eventide.

    Based in part on the early success of the Apple iPad, I expect Apple to reach $65 billion in FY 2010 revenue, a 50% increase in revenue over the prior fiscal year. I expect earnings per share growth to accelerated beyond the 63% experienced in the first six months of the fiscal year.

    The pace of Apple’s revenue and earnings growth for the balance the fiscal year will support appreciation in the share price even if the current p/e multiple remains constant.

         
  • Posted: 16 May 2010 02:29 PM #1

    Of course, as the pace of revenue growth expands, so does the pace of earnings growth. The June quarter results are beginning to come into focus. Earnings growth will be huge.

         
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    Posted: 16 May 2010 03:17 PM #2

    DawnTreader - 16 May 2010 03:40 AM

    My latest posting at Eventide.

    Based in part on the early success of the Apple iPad, I expect Apple to reach $65 billion in FY 2010 revenue, a 50% increase in revenue over the prior fiscal year. I expect earnings per share growth to accelerated beyond the 63% experienced in the first six months of the fiscal year.

    The pace of Apple’s revenue and earnings growth for the balance the fiscal year will support appreciation in the share price even if the current p/e multiple remains constant.

    A solid forecast. I may need to re-tune my model as right now it shows $61 billion for FY 10.  My CY 2010 shows above $65b.

    I had turned the iPhone growth rate down to 50%, so that may not no longer be justifiable.  I’m also keeping iPads down to three million per quarter assuming production constraints.

    FY EPS is an easy $14.6 with $15 not a stretch by any means. My forward 12 mo EPS today stands at $17. Ex-cash forward P/E is now 12.

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  • Posted: 16 May 2010 03:58 PM #3

    Since we’re dropping #s at the midway point of Q3, my model is shoring up at $64B for FY 2010 and $15.4 EPS.  We are going to learn much from Apple’s Q3 earnings call about iPads and gross margins going forward.  Frankly, I think my #s are conservative, barring any adverse macroeconomic events that derail things. 

    A P/E of 22 would give us $342 PPS on the FY 2010 earnings call in Oct.

         
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    Posted: 16 May 2010 04:13 PM #4

    Mercel - 16 May 2010 06:58 PM

    Since we’re dropping #s at the midway point of Q3, my model is shoring up at $64B for FY 2010 and $15.4 EPS.  We are going to learn much from Apple’s Q3 earnings call about iPads and gross margins going forward.  Frankly, I think my #s are conservative, barring any adverse macroeconomic events that derail things. 

    A P/E of 22 would give us $342 PPS on the FY 2010 earnings call in Oct.

    The side effects of this would be very nice. :-D

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    Posted: 16 May 2010 05:36 PM #5

    How do we get to Apple’s all-time record quarter? 

    I do think bettering fiscal [EDIT: Q1’s] results is a possibility, but not necessarily a better-than-average one.

    For the sake of simplicity, let’s use Q2 as a base.

    Will Macs do the same or better?  Most likely, the first part of the back-to-school purchases have historically helped.  Add in a MacBook refresh, iMac refresh maybe, the numbers should definitely be good. 

    Will iPods do the same or better?  Should be about the same or better, given the “10 million or so iPods sold in a quarter” data points we have from 2008 onwards.

    iPad’s impact?  3 million sold looks reasonable.  I don’t think there will be that much in the way of cannabalization, but even if we assume iPad represented a half-billion or so of “redirected sales”, that’s still adding somewhere around $1.3-$1.5 billion to Apple’s revs, assuming an ASP of $600-ish.

    At this point, assuming the other line items (maybe a combined $2.5 billion or so when you take out Mac, iPod and iPhone hardware and carrier payments) don’t change that much, that leaves iPhone.  Because iPhone is far from an established product line, predicting trends with any accuracy seems next to impossible, especially when you throw in the leaked prototype.  On the one hand, the iPhone 3GS is already in high demand, if the unit sales record in Q2 is anything to go by.  And if Apple decides to launch the next iPhone a couple of weeks before the fiscal quarter ends, which WWDC’s schedule allows, there’s potential for monster sales limited only by production capacity and number of launch countries.  But if Apple launches later, the “buying pause” phenomenon from the iPhone leak could make itself felt. 

    Can Mac, iPad and iPhone rack up an additional $2 billion or so in revs over Q2?  I think it all hinges on the iPhone launch.

    [ Edited: 16 May 2010 08:05 PM by Mav ]

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  • Posted: 16 May 2010 07:20 PM #6

    mbeauch - 16 May 2010 07:13 PM
    Mercel - 16 May 2010 06:58 PM

    Since we’re dropping #s at the midway point of Q3, my model is shoring up at $64B for FY 2010 and $15.4 EPS.  We are going to learn much from Apple’s Q3 earnings call about iPads and gross margins going forward.  Frankly, I think my #s are conservative, barring any adverse macroeconomic events that derail things. 

    A P/E of 22 would give us $342 PPS on the FY 2010 earnings call in Oct.

    The side effects of this would be very nice. :-D

    Indeed. 

    Unfortunately, negative side effects from intervening stock price drops could include nausea, faintness, dizzy spells, and cold sweats.  For anyone thinks the stock goes straight up from here, just read the Elliott Wave thread.  rolleyes

         
  • Posted: 16 May 2010 07:35 PM #7

    Mav - 16 May 2010 08:36 PM

    How do we get to Apple’s all-time record quarter? 

    I do think bettering fiscal Q2’s results is a possibility, but not necessarily a better-than-average one.

    The Apple iPad at three million (or more) units in the quarter would deliver around $2 billion in revenue alone. With an iPad ASP at least slightly above the ASP for the iPhone, each iPad sold is equal to or greater in revenue contribution to each iPhone sold.

         
  • Posted: 16 May 2010 08:06 PM #8

    For the first six months of this fiscal year Apple has delivered revenue growth of about 40% and eps growth of about 63%.

    In FQ3 ‘09 Apple reported revenue (as amended in the retrospective filings) of $9.734 billion and eps of $2.01. For the sake of discussion let’s assume rates of growth continued for the June quarter without consideration of iPad activity.

    That would deliver revenue of about $13.6 billion and eps of about $3.28 per share. Now let’s assume 3 million iPads are sold in the quarter at a conservative ASP of $650. That delivers revenue of about $1.95 billion and a more than commensurate contribution to eps. Move the unit numbers and the ASP up just a bit and the performance is in record territory. We could factor in all kinds of variables (positive and negative) into the mix. But if the June quarter doesn’t deliver record results it may come darned close.  These are oversimplifications used but the points remain the same.

    In the first fiscal quarter Apple delivered $15.68 in revenue and eps of $3.67.

         
  • Posted: 16 May 2010 10:04 PM #9

    The full text is on this page of my Posts At Eventide blog.