AFB Analyst AAPL FQ4 Estimates

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    Posted: 13 October 2010 01:23 AM #136

    I’ll wait until the CC and issued guidance before I make any early calls on Q1.  I agree the number will shock the world.  I need to see evidence of iPad growth and sustained iPhone demand though (yes iPhone demand seems like a given, but I like to hear it from Cook and Co. first.

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  • Posted: 13 October 2010 02:23 AM #137

    cranium - 13 October 2010 04:18 AM


    What do you apple will guide for q1 revenue?

    Seriously, does it matter?

         
  • Posted: 13 October 2010 02:24 AM #138

    Mav - 13 October 2010 04:23 AM

    I’ll wait until the CC and issued guidance before I make any early calls on Q1.  I agree the number will shock the world.  I need to see evidence of iPad growth and sustained iPhone demand though (yes iPhone demand seems like a given, but I like to hear it from Cook and Co. first.

    I need solid FQ4 data before publishing even preliminary FQ1 estimates. As it is I’m in for $100 billion in revenue in FY 2011 and eps of $23 or more.

         
  • Posted: 13 October 2010 02:31 AM #139

    adamthompson3232 - 13 October 2010 05:27 AM

    Yes, I think it matters far more than the September quarter’s actual results.

    Why?

    I mentioned in this blog post I view guidance as nothing more than management’s view of virtually guaranteed results at the start of the quarter

         
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    Posted: 13 October 2010 03:08 AM #140

    I think DT just means that Apple’s guidance is “not to be taken seriously” because it’s always so low.  It isn’t significant on its own.  That said, I do value Oppenheimer’s guidance to the extent I believe I can extrapolate from the clues given.

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  • Posted: 13 October 2010 03:38 AM #141

    adamthompson3232 - 13 October 2010 06:17 AM
    Mav - 13 October 2010 06:08 AM

    I think DT just means that Apple’s guidance is “not to be taken seriously” because it’s always so low.  It isn’t significant on its own.  That said, I do value Oppenheimer’s guidance to the extent I believe I can extrapolate from the clues given.

    I understand and agree. But because it is always so jokingly low and the number is going to be so big, the stock is going to take off when he throws out $23B or so for the quarter.

    I don’t want to get into a guidance guessing game, but I don’t expect it to come in lower than $23 billion.

         
  • Posted: 13 October 2010 06:26 AM #142

    Last Q, as I recall, the talking heads were shocked at Apple’s guidance being so high.  Some even commenting that it was purposefully overstated to counter “antennagate”.  Well, here we are three months later and…it was the same old Apple story.  As low as necessary to be almost a guarantee.

    This time the reaction to $23 or $25 or whatever will be a more broad understanding of what the real number might be.

         
  • Posted: 13 October 2010 09:03 AM #143

    DawnTreader - 13 October 2010 05:23 AM
    cranium - 13 October 2010 04:18 AM


    What do you apple will guide for q1 revenue?

    Seriously, does it matter?

    It’s a fair question DT, and I agree with everything in your blog post—it is a number based on ‘near guaranteed results’.

    The reason I ask is that I think it’s worthwhile for everyone to consider the number and project how the market will react to a 23+B print on the guidance. Doing this did factor into the aggression I’m taking into the earnings announcement. 

    For most stocks, guidance is a critical piece of the earnings release. We all remember the days when the stock seemed to not react as ‘it should have’ out of earnings due to the market not understanding Peter’s methods on guidance. The street would compare Apple’s guidance to analysts’s actual expectations of the next quarter and the stock would get some high voltage electroshock. Eventually, the street learned to either ignore or instead compare to an analysts guess of what Apple’s guidance would be instead of the analysts own view of the next quarter.

    I agree with the others, when the street sees the guidance of 18B for this quarter was still in the mode of ‘guaranteed results’, and then couples this with what I expect to hear for FQ1, the realization of what’s really coming next quarter will hit home with even those that didn’t quite get the Apple growth story. It seems quite likely that that the magnitude of the revenue, EPS and price target revisions for the holiday quarter and F2011 will be headlines in themselves as we come of out earnings.

         
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    Posted: 13 October 2010 12:44 PM #144

    DT - looking over the numbers, it looks like while you and I have “high” revenue numbers (72% and 76% YOY rev growth), the earnings, while still awesome, “lag” behind (67%  and est. 73% YOY earnings growth).  The official current GAAP fiscal Q4 2009 numbers were:  $12.25B revs, $2.532B net income.

    Why is that?  Apple’s earnings growth doesn’t normally lag revenue growth on a percentage basis.  Massive revenues should bring leverage advantages on price and production costs on a whole new level.  Not only that, we’re set to have a record mix of a known high-profit product (iPhone) as well as one that I would expect to have better-than-Mac-on-a-percentage-basis margins (iPad).  Record Mac sales will also amp up profits. iPods will have relatively little impact on margin mix. 

    Are we too conservative on the earnings?  It’s only one way of looking at things, but this could indicate the potential for some serious upside surprise.

    [ Edited: 13 October 2010 12:54 PM by Mav ]

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  • Posted: 14 October 2010 01:36 AM #145

    Mav - 13 October 2010 03:44 PM

    DT - looking over the numbers, it looks like while you and I have “high” revenue numbers (72% and 76% YOY rev growth), the earnings, while still awesome, “lag” behind (67%  and est. 73% YOY earnings growth).  The official current GAAP fiscal Q4 2009 numbers were:  $12.25B revs, $2.532B net income.

    Why is that?  Apple’s earnings growth doesn’t normally lag revenue growth on a percentage basis.  Massive revenues should bring leverage advantages on price and production costs on a whole new level.  Not only that, we’re set to have a record mix of a known high-profit product (iPhone) as well as one that I would expect to have better-than-Mac-on-a-percentage-basis margins (iPad).  Record Mac sales will also amp up profits. iPods will have relatively little impact on margin mix. 

    Are we too conservative on the earnings?  It’s only one way of looking at things, but this could indicate the potential for some serious upside surprise.

    I’ve thought about this quite a bit. In terms of my numbers, this can be explained by a slight drop in GM and a slight uptick in tax rate. Combine the two and it has a material impact on eps results. Combine that with “share creep” and it does change the numbers. Please remember the share count is rising and Apple may deliver a higher rate of profit growth but that growth is muted slightly by an increase in the number of fully diluted shares.

         
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    Posted: 14 October 2010 01:52 AM #146

    Were that many shares created by vesting stock options this quarter?  Surely nothing on the order of, say, more than 10 million, right?  Also, share creep would only go to EPS dilution (approx. 1% worth of dilution per 10 million shares, nothing huge), not to the net income number itself.

    Of course a lower projected GM and higher tax rate will affect the bottom line.  But we’re talking a projected YOY GM decrease of 3%, and the tax rate will offset somewhat by probably falling by 5% or more over the 32.1% tax rate in fiscal Q4 ‘09.  Slight negative and very slight positive shouldn’t be enough, in my mind, to “reverse” the trend seen last fiscal quarter:  61% increase in revs and 78% increase in earnings (as in net income) YOY.  Fiscal Q3 2010 had 1.8% lower YOY GM balanced by a 7.9% lower tax rate.

    I’m probably mixing apples and oranges a little bit here, but you get the general idea.  Honestly, I think we’re all being conservative, which isn’t a bad thing at all.  Something like 60-70% YOY rev increase, 70%-80% YOY net income increase for this fiscal quarter is entirely plausible.

    [ Edited: 14 October 2010 02:35 AM by Mav ]

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  • Posted: 14 October 2010 03:34 AM #147

    Mav, share creep can be seen in YOY comparisons. Stock-based compensation is a component of R&D and GS&A. 24 additional stores were opened and staffed in the quarter and the international rollout of the iPad continued through the quarter. I’m not worried.

    I’m not comparing GM and tax rates YOY. I’m looking at the progression of ratios over the quarters.

         
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    Posted: 14 October 2010 03:41 AM #148

    My mistake, I had stock-based compensation in the back of my mind.  I hear it every CC, it’s rolled into operating expenses, and no one’s made a big deal about it during CCs.

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  • Posted: 14 October 2010 03:52 AM #149

    Mav - 14 October 2010 06:41 AM

    My mistake, I had stock-based compensation in the back of my mind.  I hear it every CC, it’s rolled into operating expenses, and no one’s made a big deal about it during CCs.

    Nobody’s making a big deal about anything when revenue and earnings are rising so quickly.  grin

         
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    Posted: 14 October 2010 04:07 AM #150

    Of course.  smile

    Ah, forgot to finish my thought.  I’m pretty sure that YOY net income growth has outpaced YOY revenue growth every single quarter since fiscal 2009 at least.  I see no reason why this quarter will be any different, especially with all of the earnings-driving factors in play. 

    But, as I said, we’re being conservative in our estimates, so that largely explains why we both have the numbers showing roughly equivalent revs/net income growth in percentage terms.  If we cranked up the YOY growth ratio by just 5%, the EPS number would go up about $0.13.  This quarter could be really special even by Apple’s standards.  And to think this is only Part 1 of AAPL’s Blowout Earnings Extravaganza…

    [ Edited: 14 October 2010 04:10 AM by Mav ]

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