Apple 2.0: The Quarterly Estimate Comparisons Begin!

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    Posted: 07 January 2012 02:57 PM #16

    $60B for fiscal Q1 Robert?  Really? raspberry

    I’m expecting to see $45.5B revs from you.

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  • Posted: 07 January 2012 04:00 PM #17

    Mav - 07 January 2012 06:57 PM

    $60B for fiscal Q1 Robert?  Really? raspberry

    I’m expecting to see $45.5B revs from you.

    Clean your binoculars and your scope.  grin

         
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    Posted: 07 January 2012 04:02 PM #18

    I don’t wanna be seeing any “weaksauce” (as they say) 26% net profit margin outta you, Robert, if you’re anywhere near where I think you are!

    Also nice to see you rebounded from that bearish tone you seemed to take on after last quarter.

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  • Posted: 07 January 2012 04:13 PM #19

    Mav - 07 January 2012 08:02 PM

    I don’t wanna be seeing any “weaksauce” (as they say) 26% net profit margin outta you, Robert, if you’re anywhere near where I think you are!

    Also nice to see you rebounded from that bearish tone you seemed to take on after last quarter.

    Mav, I never took on a bearish tone. The factor of the matter is the September quarter outcome revealed challenges and supported my axiom that it’s innovation that drives Apple’s success. Keep in mind this is a 14-week fiscal period and the rates of revenue and earnings growth will benefit from the one-week extension to the quarter that occurs once every six years. I can hardly be called a bear with a standing $640 price target and a revenue estimate of one-quarter trillion dollars in FY2013.

    I don’t overlook Apple’s challenges nor growth constraints.

         
  • Posted: 07 January 2012 04:15 PM #20

    My numbers will be posted tonight at Eventide and the article will replace my FQ1 preview post at the top of the page.

         
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    Posted: 07 January 2012 04:19 PM #21

    Well, I never said you _were_ a bear, Robert.  And $640 shows you’re up to your usual, razor-sharp, fact-based AAPL analysis.

    Also, good to see you around, if perhaps briefly.  How goes the preparations for the Apple Investor Summit?

    [ Edited: 07 January 2012 04:21 PM by Mav ]

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    Posted: 08 January 2012 03:23 AM #22

    Excellent work!  Reading through the article now and will have comments soon, Robert.

    [ Edited: 08 January 2012 03:57 AM by Mav ]

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    Posted: 08 January 2012 03:38 AM #23

    DawnTreader - 07 January 2012 08:15 PM

    My numbers will be posted tonight at Eventide and the article will replace my FQ1 preview post at the top of the page.

    Excellent analysis Robert.  Strong quarter projections matching Asymco and Andy. 

    It should be noted that you have changed your views regarding p/e.  in 2010 you were certain we would see 18.  Now your 640 pps reflects flat p/e of 13.9.

    I agree 100% with your fiscal 2012 projections.  Not sure we will see 12.20 though for 1st quarter.  Anything above 11.10 is great in my book.

         
  • Posted: 08 January 2012 03:41 AM #24

    Mav - 08 January 2012 07:23 AM

    Excellent work!  Reading through the article now and will have comments soon, Robert.

    I’m still working on it… The December quarter estimates have been a real grind.

         
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    Posted: 08 January 2012 03:57 AM #25

    Comments on your excellent article and your estimates: 

    - I agree that a 35.75M iPhone quarter is possible.  The unknown is Apple’s production ramp-up capacity and I’m estimating conservatively (32.47M units) until Apple shows its cards 17 days from now.  Apple could have sold well over 36M iPhones if only it can actually make that many (or more accurately, Tim Cook and Co. chose to make that many) in a quarter.  I would not hesitate to estimate over 35.75M iPhones for fiscal Q2 if demand remains strong.

    - I disagree with the iPad estimate.  I think Apple can at least double last year’s unit sales (to 14.66M) and seasonality will allow this to happen.  My current assumption is that iPads, being in-between an essential like a Mac or iPhone and a lifestyle accessory/holiday gift item like an iPod (speaking in terms of seasonality, acknowledging that iPad is massively outselling Mac), will post a 14.6M+ unit sales number for the holiday quarter, which is still below the current iPad YOY growth rate.

    - I think your GM number is conservative (related: net profit margin). 

    Most of us have iPhones being at somewhere around 50% or more of total revenue (vs. about 39% a year ago).  iPads will sell in force as well, but I believe GM has gone up over time, particularly with respect to those super-high-profit 3G models (no one believes the 3G radio is anywhere close to $130 in added product cost).  More astonishingly, because of iPhone’s extreme growth, iPads will not have taken up much more of the revenue pie versus last year (your est. of about 19% of total revs vs. about 17.2% actual a year ago)  So iPhones will richen the margin mix more than ever, while the 4S is unlikely to cost appreciably more than the iPhone 4 did at the time of its introduction.

    Meanwhile, there’s Macs, which won’t alter margins much, and iPods being less margin-dilutive than ever before due to lower sales and being dwarfed by iPhone.  Throw all that together and compare to the last high-GM quarter (Q3 2011), and I see GM going up considerably more than 80 basis points (41.7% actual Q3).

    - On a related note, I think your net profit margin % is very conservative.  Recall that fiscal Q3 (admittedly, the iPhone 4 was in a high-margin phase due to its maturity and likely placement on the cost curve) yielded a net profit margin of 25.5% on 41.7% GM, 8.9% OpEx ratio, and 23.5% taxes.  We both agree GM will go up and OpEx will go down, which make two upside factors for net profit margin.

    Running Q3’s tax through my own estimates (I have tax at Oppenheimer’s guidance of 24.25%, as you do) has a fairly small effect on Apple’s take-home profit (increased net profit margin by 0.3% for my numbers).  Rather, I think Apple’s unbelievable revenue leverage combined with mercilessly driving down the cost curve (which it can do on an epic scale with iPhone and iPad) will be the overwhelming influence, and should drive net profit margin closer to 26.5% or even higher based on your revenue estimate, which is more than 50% higher than the already mind-blowing Q3 2011 number.

    [ Edited: 08 January 2012 04:13 AM by Mav ]

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  • Posted: 08 January 2012 04:05 AM #26

    Mav:

    I won’t be creating a separate topic for the post. The number and the narrative can be found here.

         
  • Posted: 08 January 2012 04:10 AM #27

    omacvi - 08 January 2012 07:38 AM
    DawnTreader - 07 January 2012 08:15 PM

    My numbers will be posted tonight at Eventide and the article will replace my FQ1 preview post at the top of the page.

    Excellent analysis Robert.  Strong quarter projections matching Asymco and Andy. 

    It should be noted that you have changed your views regarding p/e.  in 2010 you were certain we would see 18.  Now your 640 pps reflects flat p/e of 13.9.

    I agree 100% with your fiscal 2012 projections.  Not sure we will see 12.20 though for 1st quarter.  Anything above 11.10 is great in my book.

    Sponge:

    I do expect the p/e multiple to expand in 2012. However, to avoid discussions that move beyond share price appreciation generated by organic earnings growth, I’ve chosen to keep the multiple modest for now. I will be revising my target price following the release of FQ1 results.

         
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    Posted: 08 January 2012 04:15 AM #28

    If you don’t mind me saying so, Robert (given how we used to try to avoid speaking in too many specifics prior to earnings), I think that in more sane times, AAPL could easily support a share price of around $700 by November.  That was my target price once upon a time.  Unfortunately, AAPL has never been analyzed fairly, as it should be.  So we’ll have to make do with less.  Which, in any event, is still more than enough.

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

         
  • Posted: 08 January 2012 04:21 AM #29

    DawnTreader - 07 January 2012 08:15 PM

    My numbers will be posted tonight at Eventide and the article will replace my FQ1 preview post at the top of the page.

    Here’s hoping you and Horace are closer to actual than I am.  Great analysis.

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  • Posted: 08 January 2012 04:25 AM #30

    Mav - 08 January 2012 08:15 AM

    If you don’t mind me saying so, Robert (given how we used to try to avoid speaking in too many specifics prior to earnings), I think that in more sane times, AAPL could easily support a share price of around $700 by November.  That was my target price once upon a time.  Unfortunately, AAPL has never been analyzed fairly, as it should be.  So we’ll have to make do with less.  Which, in any event, is still more than enough.

    A multiple expansion would need to be delivered by the market and would be based primarily on overall market conditions.