Predicting iOS volumes using the 10K

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    Posted: 27 October 2011 10:31 AM

    The method of forecasting using the PP&E is coming together nicely.

    At least from a year-long perspective the correlation of spending and production of iOS seems very solid.

    In other words, yesterday Apple pretty clearly told us how many iOS devices to expect next year.

    http://www.asymco.com/2011/10/27/the-tipping-hand-of-production-how-apple-foreshadows-ios-volumes/

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    Posted: 27 October 2011 10:36 AM #1

    I liked the analysis.  Keep up the good work.  Now if we could get the analysts to read the 10K and figure out that Apple is planning for 100% YOY growth for iOS devices and reflect that in their forecast.

         
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    Posted: 27 October 2011 01:30 PM #2

    All in all, this fits into AAPL price target of over $ 550, even with compressed PE.

         
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    Posted: 27 October 2011 02:10 PM #3

    Very nice analysis!

    A more objective way of theorizing what we already suspect - Apple’s iPhone/iPad push could lead to combined sales of 200M+ units next fiscal year.

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  • Posted: 27 October 2011 11:11 PM #4

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Horace does an exceptional job finding nuggets in Apple’s quarterlies.  But this one is, by far, his best and most informative.

    If true, and I find Horace’s research and analysis impeccable, this means that Apple will generate $150 BILLION from iOS devices alone during fiscal 2012 (not bad for a company that didn’t gross that much, in total, from 1985 to 2000).  Without Horace’s analysis I would have disbelieved anyone else’s claim of that much revenue.  But Horace’s work has me convinced that my current estimate is 13% too low.

    This is the kind of stuff WS should be doing Oh well…

    Horace, I’m truly impressed with your latest.

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    Posted: 27 October 2011 11:50 PM #5

    Gregg Thurman - 28 October 2011 02:11 AM

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Good work, Horace grin.

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    Posted: 28 October 2011 12:34 AM #6

    Gregg Thurman - 28 October 2011 02:11 AM

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Horace does an exceptional job finding nuggets in Apple’s quarterlies.  But this one is, by far, his best and most informative.

    If true, and I find Horace’s research and analysis impeccable, this means that Apple will generate $150 BILLION from iOS devices alone during fiscal 2012 (not bad for a company that didn’t gross that much, in total, from 1985 to 2000).  Without Horace’s analysis I would have disbelieved anyone else’s claim of that much revenue.  But Horace’s work has me convinced that my current estimate is 13% too low.

    This is the kind of stuff WS should be doing Oh well…

    Horace, I’m truly impressed with your latest.

    A terrific analysis. I honestly had to reread it and then stop to think about it for a while before commenting.

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    Posted: 28 October 2011 01:11 AM #7

    Mace - 28 October 2011 02:50 AM
    Gregg Thurman - 28 October 2011 02:11 AM

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Good work, Horace grin.

    I agree.  I think he and DT are twins:)

         
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    Posted: 28 October 2011 12:08 PM #8

    Gregg Thurman - 28 October 2011 02:11 AM

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Horace does an exceptional job finding nuggets in Apple’s quarterlies.  But this one is, by far, his best and most informative. . . . . . . .

    Horace, I’m truly impressed with your latest.

    Me too.  Also, stunned silence in awe of what my eyes were seeing after it was plainly laid out, doesn’t mean I (and probably lots of folks) weren’t insanely impressed.  But, I was very impressed, what I’ve been thinking about a lot is the best way to position based on those numbers.

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    Posted: 28 October 2011 02:18 PM #9

    ChicagoBob - 28 October 2011 03:08 PM
    Gregg Thurman - 28 October 2011 02:11 AM

    I’m dismayed as hell that there hasn’t been more responses to this analysis of Horace’s.

    Horace does an exceptional job finding nuggets in Apple’s quarterlies.  But this one is, by far, his best and most informative. . . . . . . .

    Horace, I’m truly impressed with your latest.

    Me too.  Also, stunned silence in awe of what my eyes were seeing after it was plainly laid out, doesn’t mean I (and probably lots of folks) weren’t insanely impressed.  But, I was very impressed, what I’ve been thinking about a lot is the best way to position based on those numbers.

    Buy the stock…or jan 13 calls.  grin

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  • Posted: 28 October 2011 03:17 PM #10

    Red Shirted Ensign - 28 October 2011 05:18 PM
    ChicagoBob - 28 October 2011 03:08 PM

    Me too.  Also, stunned silence in awe of what my eyes were seeing after it was plainly laid out, doesn’t mean I (and probably lots of folks) weren’t insanely impressed.  But, I was very impressed, what I’ve been thinking about a lot is the best way to position based on those numbers.

    Buy the stock…or jan 13 calls.  grin

    The highest JAN 13 $10 Call Spread you can get today ($625/$635). Cost $0.80.

    October 2013 TTM >$60.00
    ISM < 15
    AAPL = $900
    spread yield 2500%

    If I could buy a higher Strike than the $625/$635 I would. I should point out that my iOS device volume for CALENDAR 2012 is only 88% of Horace’s theoretical doubling.

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    Posted: 28 October 2011 07:38 PM #11

    Don’t want to be the skunk at the garden party but…..

    How do we know that Apple can SELL this many devices?

    And what happens to earnings if they tool up and manufacture them, and demand doesn’t double?

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    Posted: 28 October 2011 07:45 PM #12

    Uh…the demand’s there.  Trust me.

    And if there’s one thing Tim Cook and Co. NEVER do, it’s overestimate demand.

    Remember, they have a FAR better idea of demand than we do, based on orders from carriers and third-party retailers, their own internal projections, real-time sales reports and analytics (Apple uses SAP IIRC), lots of trend data, etc.  Add to that JIT inventory/manufacturing, and Apple can throttle supply at will, even though I’m thinking it’s more like FULL throttle for iPhone 4S and acceleration for iPad 2.

    Now, about those “leap of faith” products?  iPad 1?  iPad 3?  Apple employs some damn good guesswork, and they haven’t overshot the mark so far.

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  • Posted: 28 October 2011 08:05 PM #13

    Xtra - 28 October 2011 10:38 PM

    Don’t want to be the skunk at the garden party but…..

    How do we know that Apple can SELL this many devices?

    And what happens to earnings if they tool up and manufacture them, and demand doesn’t double?

    Good question to ask.  My opinion,
    - which company has the highest margin and can fight a price war?
    - which company has the widest offering of leveraged ecosystem ( iTunes, newsstand, iBookstore, iWork’s, apple tv,etc)
    - which company has largest cash balance and can make it work ( financing OEM, channel incentives, great marketing campaigns, etc)
    - which brand is most coveted for consumer electronics (clue: i heard news of people selling their own kidney to get the product)

    Answer: Apple Inc.

    For at least another year or maybe two demand is least of Apple’s worry. They just expand to additional countries and people buy.

         
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    Posted: 28 October 2011 08:14 PM #14

    I hope you guys are right….if not it could get ugly…...the q4 disappointment would be a walk in the park by comparison.

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    Posted: 28 October 2011 08:20 PM #15

    You need to specify your worries if you can.

    What part of “4 million plus iPhone 4Ses sold in 3 days” is concerning to you?  If I know Apple, they actually got a number more like 4.5M, but when the prior year compare was just 1.7M, why set the bar any higher than you need to?

    iPhone will take care of itself.  iPad will be a hot holiday gift.  I don’t see fiscal Q1 2012 as the quarter to be concerned, absent a complete macro meltdown.

    iPhone 4S will be doing fine, with the ability to open it up to China, while iPad 3 presumably debuts within 6 months.  That’s the “iPhone 5” version of the iPad everyone’s been waiting for.

    If there’s one “bright side” to Apple, it’s that iPhones and iPads are kinda interchangeable from a revenue perspective.  A few hundred thousand more iPads than expected can help pick up the slack for a few hundred thousand less iPhones than expected.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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