The Apple 2.0 June Quarter Analyst Estimate Index

  • Posted: 21 July 2012 11:06 PM

    The Apple 2.0 June Quarter Analyst Estimate Index

    The revenue and eps estimates from both the independent analysts and the Wall Street pros was posted on Friday at Apple 2.0.

         
  • Posted: 21 July 2012 11:14 PM #1

    From my comment on the article:

    “There are essentially two noteworthy differences in the estimates between the independents and the pros. The first noteworthy difference between the two groups is iPad unit sales estimates. The independents are much more aggressive in their expectations for iPad unit sales than the pros.

    The second noteworthy difference between the two groups is in the gross margin estimates. In the first six months of the current fiscal year, Apple’s gross margin averaged 45.9%. Although only seven of the independents have gross margin expectations at or above that level for the June quarter, Scott Craig has the highest gross margin estimate among the pros at 44.9%.

    The difference in iPad unit sales estimates is the big dividing line between the independents and the pros. The difference in the gross margin estimates between the independents and the pros widens the eps estimate gap between the groups.”

         
  • Avatar

    Posted: 21 July 2012 11:33 PM #2

    You’re a bit “low” this quarter Robert (though your GM of 45.3% is 80 basis points higher than where I am).  Would you mind sharing a little of your thought process with us?  We’re both thinking the same thing as far as iPads - obviously the main difference would be in your 29.49M iPhone estimate, and I’m very interested in how you arrived at that number.

    Signature

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

         
  • Posted: 22 July 2012 12:12 AM #3

    Mav - 22 July 2012 02:33 AM

    You’re a bit “low” this quarter Robert (though your GM of 45.3% is 80 basis points higher than where I am).  Would you mind sharing a little of your thought process with us?  We’re both thinking the same thing as far as iPads - obviously the main difference would be in your 29.49M iPhone estimate, and I’m very interested in how you arrived at that number.

    Please see my final estimates for the June quarter and accompanying narrative at Posts At Eventide.

         
  • Posted: 22 July 2012 12:15 AM #4

    Mav:

    See my narrative in the post on anticipated iPhone sales for details on my unit sales estimate.

         
  • Avatar

    Posted: 22 July 2012 12:16 AM #5

    I should have known.  LOL

    *clicks on over*

    I do see your point on sellthrough.  But I’m wondering about Apple’s “managing” of iPhone’s growth rate (recall my theory on Apple’s aggressively managed growth), as well as the iPhone supply/manufacturing chain.  If iPhone starts decelerating from ~ 35M to ~ 30M in just one quarter, not only is that “inefficient”, it’s also unprecedented in iPhone’s history.  It also portends a seriously ugly number for fiscal Q4 2012 without a new iPhone in that quarter to smooth things out.  I do think Asia isn’t “tired” of iPhone just yet, though having Siri pre-iOS 6 would’ve really helped (and it will really help going forward).

    Of course, iPhone 4S heralded a new kind of seasonality, so we’re still in the data-gathering phase.

    I was trying to aim for the bullseye on iPhone - so given unconscious bias, that may mean I’m aiming a little too high on that score.  But to “compensate”, I do have one of the lower GMs, so my EPS is not terribly far from yours.

    [ Edited: 22 July 2012 12:21 AM by Mav ]

    Signature

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

         
  • Posted: 22 July 2012 12:39 AM #6

    This is a reminder to all Braeburn Group members in the AFB, we have an “all hands on deck” call for Tuesday and coverage of the day’s trading and the conference in the Group.

    For those unfamiliar with the Braeburn Group of analysts, the first requisite is membership in the AAPL Independent Analysts group on LinkedIn. Please contact me inside LinkedIn via of a LinkedIn group membership request for more information.

    Now back to our regularly scheduled programming.  grin

         
  • Posted: 22 July 2012 12:40 AM #7

    Mav - 22 July 2012 03:16 AM

    I should have known.  LOL

    *clicks on over*

    I do see your point on sellthrough.  But I’m wondering about Apple’s “managing” of iPhone’s growth rate (recall my theory on Apple’s aggressively managed growth), as well as the iPhone supply/manufacturing chain.  If iPhone starts decelerating from ~ 35M to ~ 30M in just one quarter, not only is that “inefficient”, it’s also unprecedented in iPhone’s history.  It also portends a seriously ugly number for fiscal Q4 2012 without a new iPhone in that quarter to smooth things out.  I do think Asia isn’t “tired” of iPhone just yet, though having Siri pre-iOS 6 would’ve really helped (and it will really help going forward).

    Of course, iPhone 4S heralded a new kind of seasonality, so we’re still in the data-gathering phase.

    I was trying to aim for the bullseye on iPhone - so given unconscious bias, that may mean I’m aiming a little too high on that score.  But to “compensate”, I do have one of the lower GMs, so my EPS is not terribly far from yours.

    It’s not uncommon for Apple to have greater iPhone sell-through than reported unit sales in particular quarters. Just under 32.5 million iPhone handsets were sold in the March quarter, not the 35.1 million units reported as sold due to channel fill.

         
  • Posted: 22 July 2012 12:47 AM #8

    Mav:

    Please see my recent article titled, Apple’s Revenue Growth: A Dual-Track Bullet Train.

    It will provide some insights as to how I go about building my estimates for each quarter. Regional growth expectations factor heavily into my numbers.

         
  • Avatar

    Posted: 22 July 2012 12:59 AM #9

    I have read that, as most all your articles, with great interest.  smile

    Amusingly enough, though I take a more simplistic, holistic/“mental blender” approach to my home game estimates, we do have fundamentally similar thought processes.  We both were attuned to the “increasing profit efficiency per revenue dollar” story early on, for example.

    Signature

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

         
  • Posted: 22 July 2012 01:08 AM #10

    So what’s the story behind your GM estimate on the quarter?

         
  • Avatar

    Posted: 22 July 2012 01:19 AM #11

    Really pretty simple.  Considerably lower ASP on iPads (projecting at around $560 IIRC) is weighing on my GM estimate.  Yes, iPhone GM will increase, and Mac will contribute to a small degree, but my overall hypothesis is that big iPad numbers will thin the GM mix somewhat, even as I suspect that “premium” new iPad + 4Gs have GMs that rival even iPhones - especially the $829 models like the one I have (you’re welcome for my small contribution to Apple’s fiscal Q2 2012 numbers LOL).

    The holistic thought process:

    35.1M iPhones / 11.8M iPads for fiscal Q2 2012 = main influences in the crazy-high 47.4% GM.  iPads were largely mature, and the newer ones were likely skewed towards higher-margin 4G models (so goes my theory)

    32.1M iPhones / 19.9M iPads that I estimate for fiscal Q3 2012:  A pool of about 52M blended sales vs. about 47M in the prior quarter.  iPhone mix reduced from about 75% to about 62%.  iPad mix increased from about 25% to 38%.  ASP projected to stay at around $560 due to popularity of lower-end new iPad/cheaper iPad 2s.  Price-dropped iPad 2s impacting GM.  Presuming blended iPhone GM to be a bit higher than 50% and blended iPad GM to be in the, say, 38-42% range, throw it all in the mental blender, season with conservatism and Mac/iPod/other revenue mix “lowering” GM further, and the result is 44.5%, a conservative 290 basis point drop sequentially.  I’m not prepared to credit iPad with additional cost-curve drivedown just yet, given the price drop of the old iPads and the new iPads just beginning the process of variable cost reduction.

    [ Edited: 22 July 2012 01:38 AM by Mav ]

    Signature

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

         
  • Avatar

    Posted: 22 July 2012 04:31 AM #12

    I would have thought the appreciating USD over the last quarter would hit GM% slightly (USD index jumped from about 79 to as high as 83 during the quarter.)

    given the majority of apples revenue is now generated outside the US, and production costs are locked in in advance, I would think GM% may drop as much as one whole % point from the USD appreciation alone.

    combined with the higher mix of the lower margin iPad this quarter, I would be shocked if GM approached anywhere close to last quarter.

    Signature

    Full Disclosure:

    - Long Apple
    - Pro: Apple HDTV, iPhone Air, Stock split, Consumer robotics

         
  • Posted: 22 July 2012 05:41 AM #13

    Burgess - 22 July 2012 07:31 AM

    I would have thought the appreciating USD over the last quarter would hit GM% slightly (USD index jumped from about 79 to as high as 83 during the quarter.)

    given the majority of apples revenue is now generated outside the US, and production costs are locked in in advance, I would think GM% may drop as much as one whole % point from the USD appreciation alone…

    Normal practice is to hedge currency fluctuations once a local price is set for a product, to cover sales until the next model revision.

    This enables Apple to hold the local price for a particular product configuration constant. Apple hates to change the price of anything (apart from WebObjects!)

    This is dependent on forecasting sales, of course. But it does offset the bulk of the effects of currency fluctuations.



    WebObjects changed twice: from $50000 to $695 to zero, as far as I recall.

         
  • Avatar

    Posted: 22 July 2012 02:51 PM #14

    Yep.  See page 40 or so of AAPL’s 2011 10-K.  Apple actively hedges against foreign currency risk.  Can’t completely manage it, and hedging costs money too, but that’s one reason why I routinely give relatively low weight to ForEx when estimating.  Apple is so conservative with money management it’s almost ridiculous.

    Signature

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

         
  • Posted: 22 July 2012 07:07 PM #15

    Here’s a chart showing share price five days before and after earnings.  It’s noteworthy that AAPL has traded higher on the FIFTH day post earnings. 

    Image Attachments

    Screen Shot 2012-07-22 at 2.55.51 PM.png

    Click thumbnail to see full-size image