Apple: Revenue Growth Vs. Growth in Operating Expenses
This post represents my final look back at fiscal years 2009 & 2010 prior to the release of December quarter results. I’m completing the series with a comparison of the pace of the growth of revenue vs. operating expenses. The impetus for this post is preparation for my operating expense estimates for the December quarter (FQ1) that ends this weekend. I expect opex to fall below 10% of revenue in each quarter of FY2011.
The post is titled Apple: Revenue Growth Vs. Growth in Operating Expenses
For a comprehensive review of Apple’s financial performance over fiscal years 2009 & 2010, please see the Posts At Eventide Resource Guide for Independent AAPL Analysts posted on Sunday.
The drop in opex as a percent of revenue and the decline in tax expense as a percent of revenue combine for a powerful net income benefit especially when matched with this quarter’s outsized growth in revenue.
One more time on this before moving from the past (fiscal years 2009 & 2010) and into the present. I expect operating expenses to fall below 10% of revenue in FQ1 as revenue rises about 70% YOY. This alone has a material impact on eps and the rate of eps growth. No matter the decline in gross margin in YOY comparisons, eps growth will be spectacular.
Again, operating expenses should fall below 10% of revenue in FQ1. This will enhance the eps outcome this fiscal year. The question is how the rise in operating expenses will impact eps in future quarters that have more moderate rates of revenue growth.
Please take a close look at your operating expenses estimates in compiling FQ1 estimates for Apple.