AFB Analyst AAPL FQ4 Estimates

  • Posted: 02 October 2010 12:37 PM #31

    They’ve been able to sell every iPad and iPhone they can make.  So how many exactly is that?  Is it just me or does there seem to be less visibility with Apples manufacturing ramp then there use to be?  Talk about dark arts.

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    Posted: 02 October 2010 12:52 PM #32

    DawnTreader - 02 October 2010 07:49 AM

    Actually, it was one of your AFB posts that inspired me to compose my Eventide posts titled Understanding Apple’s Success Made Easy.

    My association with “Understanding Apple’s Success Made Easy” makes me wonder.  raspberry

    DawnTreader - 02 October 2010 07:49 AM

    Analysts would be nuts to take a negative view if operating income and eps scaled with revenue rather than showing further improvements that otherwise might be expected in the absence of Apple’s decision to hold the line of product prices and push for revenue growth and market share in its emerging markets rather than attempt to maintain extraordinary high gross margins that were rich even by Apple’s standards.

    I think I agree as to the analysts, they should be able to figure it out at least by the conference call.  No one knows what’s going through the mind of Joe Investor though.  I need to see the whisper number first.  I think there’s a good chance that Apple will not make last Q4’s net profit margin in large part due to their product adoption push. 

    There’s still room to make $4.50 EPS fairly easily (I figure Apple can earn about a 21% net profit margin on $20 billion with ease).  I would hope such a number wouldn’t disappoint anyone with an ounce of sense.  I of course well know the lack of sense that seizes the market from time to time.

    [ Edited: 02 October 2010 12:56 PM by Mav ]

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  • Posted: 02 October 2010 01:55 PM #33

    We need to keep in mind Apple is a growth company even though its a mega cap. There are certain build out and infrastructure investments needed as the company supports a new product line and continues to roll out new retail stores.

    That expense activity is supported by revenue and earnings growth. I’m not looking for a quarter in which revenue is leveraged to push expense ratios lower. That will come in time. For now the company is growing revenue about 50% and if costs scale only with revenue at this point in time it’s good news for long-term investors and eps growth will remain more than impressive.

         
  • Posted: 02 October 2010 03:26 PM #34

    Mav - 02 October 2010 03:52 PM

    There’s still room to make $4.50 EPS fairly easily (I figure Apple can earn about a 21% net profit margin on $20 billion with ease).  I would hope such a number wouldn’t disappoint anyone with an ounce of sense.  I of course well know the lack of sense that seizes the market from time to time.

    If memory serves, Apple missed the whisper last FQ3 2010 and AAPL was fine.

         
  • Posted: 02 October 2010 03:31 PM #35

    Mercel - 02 October 2010 06:26 PM
    Mav - 02 October 2010 03:52 PM

    There’s still room to make $4.50 EPS fairly easily (I figure Apple can earn about a 21% net profit margin on $20 billion with ease).  I would hope such a number wouldn’t disappoint anyone with an ounce of sense.  I of course well know the lack of sense that seizes the market from time to time.

    If memory serves, Apple missed the whisper last FQ3 2010 and AAPL was fine.

    Mercel, would you please take a look at this topic concerning stock-based compensation?

    I’m looking for feedback on how best to factor non-employee compensation as an expense.

         
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    Posted: 02 October 2010 06:30 PM #36

    As much as I’d like to see monster numbers for Q42010 iPhone sales, I can’t imagine that Apple has had the capacity to make 12+ million phones the past 3 months if the mix is heavily weighted to the iPhone 4, as I would expect it to be. I think the demand is there but is the capacity?

         
  • Posted: 02 October 2010 07:08 PM #37

    DawnTreader - 02 October 2010 06:31 PM

    Mercel, would you please take a look at this topic concerning stock-based compensation?

    I’m looking for feedback on how best to factor non-employee compensation as an expense.

    Unless someone else weighs in ahead of me, I can review this on Monday.  But my recall is that the value of employee stock options are expensed, made challenging by assumptions that determine the amount recognized.  GAAP is now codified, but the relevant SFAS is 123 (R).

         
  • Posted: 02 October 2010 07:13 PM #38

    eddiemurrayfan - 02 October 2010 09:30 PM

    As much as I’d like to see monster numbers for Q42010 iPhone sales, I can’t imagine that Apple has had the capacity to make 12+ million phones the past 3 months if the mix is heavily weighted to the iPhone 4, as I would expect it to be. I think the demand is there but is the capacity?

    I think capacity to build the iPhone 4 in quantity was constrained more than we might hope, which is why I gave more weight to Apple 3GS sold YOY in my 11.6M iPhones sold as compared to the 3G from last year, as part of the grand total sold in FQ4 2010.  I think this will be Apple’s biggest surprise on October 18.

         
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    Posted: 02 October 2010 10:47 PM #39

    awcabot - 01 October 2010 01:55 PM

    Here we go, let the games begin.

    Note that my estimates for this quarter haven’t changed much from my forecast back in July. I consider the mettle of an analyst by what he predicts will happen; not by estimating what has already occurred but hasn’t yet been measured.

    I am guessing 2/3 of iPods are “touch”.  This results in 23.7 million iOS devices, which seems high.  Not out of the range of reasonable posssibility, but I’m predicting 5-7 % less.

         
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    Posted: 03 October 2010 12:24 AM #40

    Could someone do a quick check on the whisper sites? I can’t find it. Thanks.

         
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    Posted: 03 October 2010 12:50 AM #41

    deagol - 03 October 2010 03:24 AM

    Could someone do a quick check on the whisper sites? I can’t find it. Thanks.

    Whisper.

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    Posted: 03 October 2010 01:01 AM #42

    Thanks Mace, that’s coming as N/A to me. You too?

         
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    Posted: 03 October 2010 06:17 AM #43

    Thanks for the estimates, everyone.

    Just my rusty 2 cents, so feel free to take them at face value, but based on what I see so far, I think iPads may well come in higher than 6 million while iPhones may well come in lower than 12 million.  Apple’s apparent inability to get the white iPhone right, combined with the bleeding-edge technology the iPhone 4 uses (especially the all-new fabrication process, ultra-high-res display, etc.), makes me a little cautious about Apple’s production capacity for the first full quarter.

    The two estimates with GM numbers are both under 40%, which is definitely the right move IMHO from a conservatism standpoint.  Historically, it would certainly seem that iPhones have the highest hardware margins by far.  OTOH, iPad’s aggressive pricing did seem to have quite an effect on fiscal Q3 2010 GM, and if not for the 24%-ish tax rate, the “increasing YOY net profit margin” streak for Apple could’ve been broken.  Assuming everything else doesn’t really have a major impact on the analysis, which will win the GM tug-of-war, 4-5 million more iPhones or 2-3 million more iPads?  Or, will iPads have run down the cost curve so iPad average GM approaches 35-40%, setting the stage for truly insane EPS numbers?  It’ll be fascinating to see.

    I’ll be placing my bets on Apple getting comfortably over $20 billion and $4.50 EPS, and, whether or not Apple feels the net income numbers will have any chance of disappointing, reiterating some form of Oppenheimer’s “look out, world” comments from the fiscal Q3 2008 CC:

    Peter Oppenheimer as transcribed by Seeking Alpha:  We?re delivering state-of-the-art products at price points that our competitors can?t match, which has resulted in market share gains in each of our products. We plan to continue this strategy and to deliver great value to our customers while making a reasonable margin but not a margin so high as to leave an umbrella for our competitors.

    [ Edited: 03 October 2010 06:20 AM by Mav ]

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 03 October 2010 12:21 PM #44

    awcabot - 01 October 2010 01:55 PM

    Here we go, let the games begin.

    Note that my estimates for this quarter haven’t changed much from my forecast back in July. I consider the mettle of an analyst by what he predicts will happen; not by estimating what has already occurred but hasn’t yet been measured.

    Thanks for the numbers aw! Would you share the math used to raise the iPhone ASP from $595 to $630? Thanks

         
  • Posted: 03 October 2010 02:03 PM #45

    cranium - 03 October 2010 03:21 PM
    awcabot - 01 October 2010 01:55 PM

    Thanks for the numbers aw! Would you share the math used to raise the iPhone ASP from $595 to $630? Thanks

    That’s an easy one. I don’t wish to speak for the amazing Alexis, but it’s an issue to address in developing numbers.

    In the revenue reporting line for iPhones (on the quarterly data summary published by Apple) the numbers include revenue generated from such items as Apple-branded and 3rd party accessories.

    The $595 ASP for the iPhone mentioned by PO during the conference call most likely does not have those items included. In my estimates (sent to PED but not yet published here), I include those additional revenue items as well to avoid confusion and to create estimates based on Apple’s reporting format.