FQ2 iPad Unit Sales (Revisited)

  • Posted: 24 March 2011 01:48 PM #61

    deagol - 24 March 2011 03:28 PM

    The guidance ratio methodology, although effective in roughly gauging what Apple may be thinking internally, shouldn’t be applied too simplistically and then stick to those ratios no matter what. Apple certainly has more info than anyone else, but they still do not know the future EPS down to a few cents (their Time Machine is just a backup solution not the real deal). I would even argue that we may in fact have a more realistic look at the quarter right now than they themselves had 3 months earlier.

    I agree.

    Outside of the Apple iPad I have much more confidence in the historical sales trends that have emerged than an extrapolation of Apple’s guidance relative to results. For this quarter in particular Apple’s forward guidance will have an impact on share price performance due to the timing of the iPad refresh. 

    Where I’m having an issue in the current quarter is with management’s statement on channel inventory entering the quarter and the obvious constrained supplies of the iPad 2 as we exit the quarter. Sell through versus units shipped are different animals to follow.

         
  • Avatar

    Posted: 24 March 2011 02:21 PM #62

    DawnTreader - 24 March 2011 04:48 PM

    Where I’m having an issue in the current quarter is with management’s statement on channel inventory entering the quarter and the obvious constrained supplies of the iPad 2 as we exit the quarter. Sell through versus units shipped are different animals to follow.

    Remember the global rollout is gradual so they wouldn’t just drawdown that iPad 1 inventory down to zero just yet. Also, I believe channel inventory as measured and cited by Apple is forward looking, i.e. we entered with 4-6 weeks of January expected demand, not Dec demand nor the average for last quarter. It’s a significant distinction. I do expect sellthrough around 8m units (roughly 1m drawdown but nowhere near 3m as a simple 7.3*5/13 backward-looking-inventory-going-down-to-zero estimate would suggest).

    [Edit: ok I just remembered any units sold for the international launch but in transit would count as inventory so perhaps an extra .5m iPad 2 inventory from that which I wasn’t accounting for, and so the drawdown would be only .5m or even less, and sellthrough about 7.5m eventhough it’s really 8m demand.  rolleyes ]

    [ Edited: 24 March 2011 03:14 PM by deagol ]      
  • Avatar

    Posted: 24 March 2011 03:17 PM #63

    deagol - 24 March 2011 05:21 PM
    DawnTreader - 24 March 2011 04:48 PM

    Where I’m having an issue in the current quarter is with management’s statement on channel inventory entering the quarter and the obvious constrained supplies of the iPad 2 as we exit the quarter. Sell through versus units shipped are different animals to follow.

    Remember the global rollout is gradual so they wouldn’t just drawdown that iPad 1 inventory down to zero just yet. Also, I believe channel inventory as measured and cited by Apple is forward looking, i.e. we entered with 4-6 weeks of January expected demand, not Dec demand nor the average for last quarter. It’s a significant distinction. I do expect sellthrough around 8m units (roughly 1m drawdown but nowhere near 3m as a simple 7.3*5/13 backward-looking-inventory-going-down-to-zero estimate would suggest).

    Deagol any thoughts on what Apple includes in the channel inventory number.  I assume this includes both Apple’s own stock and inventory sold to 3rd party but not yet in end users hands.  I agree that the 4-6 weeks is based on anticipated run rates for the forward quarter.  Tim Cook at the CC

    Channel inventory increased by about 525,000 units from the beginning to the end of the quarter to support increased sales and channel expansion, and we ended the quarter within our target range of four to six weeks.

    I would assume they end the current quarter with only about 2 weeks of channel inventory as they draw down iPad 1 inventory and have pretty much sold out iPad 2.

         
  • Avatar

    Posted: 24 March 2011 04:25 PM #64

    pats - 24 March 2011 06:17 PM

    Deagol any thoughts on what Apple includes in the channel inventory number.  I assume this includes both Apple’s own stock and inventory sold to 3rd party but not yet in end users hands.

    I’m pretty sure it includes all of what you said, including in-transit and even demo units. I pretty much agree with ending at 2 weeks of iPad 2 inventory only because of the in transit units (see my edit above), before I was guessing less than a week.

         
  • Posted: 24 March 2011 05:22 PM #65

    Ipad 2’s are becoming more available.  My friend just purchased one at 10:30 a.m. and did not wait in line at Woodfield Mall Apple Store in Schaumburg, IL.  Now that the international launch is close to complete, I think the supply will increase.  Apple probably had a good number they wanted to hit for this quarter.  Unleash the beast.  smile