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Apr-22-2009Apple may see earnings decline for March quarter(topic overview)
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" Given the relatively high lack of transparency with regard to iPhone and Macintosh sales going forward, Bullish Cross holds an increasingly cautious view with regard to Apple's fundamentals and earnings estimates in 2009." Given that Munster expects Apple to meet or beat the consensus on Mac, iPhone and iPod sales, it's hard to understand at first glance why his earnings estimate is so low $.98 per share vs. the Street's $1.09 and Zaky's $1.19. In Tuesday's report he explains that he calculated that $.98 using the guidance on gross margins that Apple issued in January (32.5%). Using the gross margins Apple enjoyed in Q1 (34.7%) his EPS estimate jumps to $1.11. Given how easily Zaky expects Apple to beat the consensus on revenue and EPS and how loudly he has railed in the past at analysts too "clueless" to follow Apple's iPhone accounting he is surprisingly toned-down this quarter. He has even canceled his quarterly smackdown. His new "agnostic" attitude toward Apple may have something to do with the fact that Wall Street seems to have come around to his view of the company, driving Apple's shares up 24% in the past month. [1] Analysts are expecting a nice bump in gross margins as well of 33.3 percent versus the 32.5 percent that Apple guided. That could also translate into a nice, bottom line beat. While I typically focus on Wall Street and its consensus expectations, it's worth noting the estimates put forth by independent analyst Andy Zaky. You can check his blog at bullcross.blogspot.com. In his note, he anticipates $1.19 in EPS and $8.318 billion in revenue, both categories well ahead of consensus. His business segment expectations are for 2.45 million Macs, 10.5 million iPods and 3 million iPhones. Zaky's been pretty accurate in the past, and he's taken several Wall Street analysts to task for their inability to forecast Apple's performance, so his numbers are worth noting now. Another closely followed independent analyst, Turley Muller, anticipates $1.25 to $1.30 a share and gross margins at 36.5 percent or higher. He says the higher margins will come from higher iPhone revenue recognition and less iPod revenue as a percentage of total revenue, coupled with slightly higher software revenue. Both he and Zaky are worth a read if you haven't done so already. Along those lines, Broadpoint AmTech is looking for 2.2 million Macs, 10 million iPods and 3 million iPhones sold. Shaw Wu at Kaufman Bros wrote that Mac sales were better on the quarter than he expected, and that iPod and iPhone sales appear to be at the high end of his estimates. Mike Abramsky, the wireless analyst at RBC, Mike Abramsky, took the unusual step earlier this week of raising his target on Apple to $90 a share from $70, but still maintains his version of a "sell" on the stock.[2]
"Valuation has risen faster than peers and while we expect near term upside around the refreshed iPhone, we continue to see elevated challenges ahead to valuation." Apple is not in the same kind of trouble as its competitors like Dell ( DELL ) for example. Apple still has rich cash holdings ($25 billion, or $29 per share), enviable profit margins (34.7% last quarter) and the deferred revenue from seven quarters of iPhone sales (which could add 30 or 40 cents to its earnings per share). The company has a basic problem with its fundamentals: two of its three primary engines of growth have stalled.[3] The consensus, according to Thomson Financial, is that Apple will report earnings of $1.09 a share on revenues of $7.94 billion a 5.7% year-to-year increase in revenue and a 6% decline in earnings. Zaky, a blogger-analyst who has taken his Apple profits and turned " agnostic " on the stock, acknowledges that he could be wrong. One could argue, he says, that the market has already adjusted for the current state of affairs by taking Apple's stock price from $200 to $120. Or that Apple's growth drivers have stalled because of weakness in the economy and not because there's anything inherently wrong with the company.[3] Neither man has turned negative on Apple. Munster retains his "buy" rating and is sticking to his price target of $180 a share one of the highest in the industry. Zaky, while acknowledging that the Street's consensus estimates for Q2 earnings of $1.09 a share on revenue of $7.94 billion are "more fairly stated" than they've been in recent quarters, still expects Apple to beat them. Munster, however, issued a report to clients Tuesday in which he predicts that Apple will miss the Street's consensus on both revenue (by a hair) and earnings (by a mile). While Zaky believes the Street is still too cautious, he has become uncharacteristically pessimistic about Apple's near-term prospects.[1]
On the revenue side, Apple sandbags the Street by an average of 4 percent over the past 10 quarters, which translates into a mid-point revenue expectation of $8 billion versus the Street's $8.3 billion consensus. Keep that in mind when Apple offers its third quarter guidance. That said, several analysts, including Andy Hargreaves at Pacific Crest Securities, expect the company to release a tablet/notebook Mac and new versions of the iPhone some time in the second half of this year. Details of some of these new devices could be unveiled during the company's Worldwide Developers Conference coming up in June.[2]
"'The first significant event will be announcing the iPhone for China,' Marshall said. 'That may take place as early as May 17, when China Unicom will turn on its 3G. The next is June 8, the first day of WWDC, when Apple will launch their new iPhone.' He expects Apple to sell a 32GB iPhone at $299, a 16GB model for $199 and possibly an 8GB device for $99," Keizer reports. "Snow Leopard, as the next Mac OS X operating system has been dubbed, will also add some black to the bottom line later this year, Marshall said. 'Snow Leopard will positively affect their bottom line. A couple of million units, and that's nearly all profit,' he predicted. Marshall has a 'buy' recommendation for Apple's stock and has bumped up his target price to $135 a share," Keizer reports.[4] The July through September quarter will save the year though: new iPhone, new iPod Touch, Snow Leopard, revised professional applications, back-to-school season, maybe additional new products. a lot of high margin sales right there. If Apple can really get through that economy, keeping their cash, not adjusting prices and still not loosing more than 1-2% market share. than they have outperformed the industry by light-years. Others prefer to sell almost without profits, which might look clever for the moment. they will have a hard time to explain higher prices once the storm has passed. At least MS did anything possible, to make "cheap" their only benefit.[5]
The last time that Apple reported a year-over-year sales dip was in July 2003 when sales also dropped five per cent. This quarter, sales are expected to be even worse with a ten per cent fall compared with the last quarter. Marshall points out that this period is always bad for Apple because most of its sales happen in the holiday quarter before. While sales of iPhones and iPods will also be sharply down compared to last year, Wall Street expects these sales to prop up Apple's bottom line.[6] "Apple Inc. on Wednesday will report that it sold fewer Macs in the first quarter of 2009 than it did in the same period a year earlier, marking the first time in nearly six years that the company will have acknowledged a sales slide, a Wall Street analyst predicted Tuesday," Gregg Keizer reports for Computerworld.[4] Wall Street expects Apple to report that it shipped 2.1-2.2 million Macs last quarter, a four to nine percent year-over-year decline. This would be the first time that Apple has reported a year-over-year decline in Mac shipments in five years.[7] As Silicon Alley's Dan Frommer points out, the Street is expecting Apple to report that it shipped 2.1 to 2.2 million Macs in the second quarter a year-over-year decline of 4% to 9%. That would represent the first time in five years that Mac sales have shrunk.[3]
"When Apple releases earnings figures, Brian Marshall, an analyst at Broadpoint AmTech, expects that the company will report a 5% drop in Mac sales during the year's first three months compared to the same quarter in 2008," Keizer reports.[4] FRUIT-THEMED toymaker, Apple will have to confess the truth that its policy of flogging really expensive gear is not working in today's climate. When Apple releases its sales figures today you can expect to see sales of Macs fall. This will be contrary to what you have seen in the tech press which still bangs on about how Macs are selling well, despite analysts' - and our - predictions to the contrary. It will be the first time in six years that the company will have to admit that its sales are falling so we guess it does not come easily to Jobs' Mob.[6]
Growth in Apple's Mac sales is expected to have stopped for the first time in five years.[8]
On top of that, you just can't base it solely on that measly $1.09 consensus EPS. If you're going to trust the analysts, at least look a year or two ahead and base your fair stock price on that expected medium-term growth. Nobody (except Andy) is seriously considering this supposed lack of growth (so far it's only been the December quarter of flat growth, so let's wait a few hours before calling this one a decline, and this of course is only on a GAAP basis) as a long-term prospect for Apple. Perhaps Andy should read some of his own recent articles. I remember one about valuation that could help him regain some perspective (as long as he's able to filter through the euphoric and hyperbolic style). Oh and BTW, it's RBC CapitAl, not Capitol.[3] Oh, and please remember one thing. The reason Apple (and everyone else) guides low is not just so they can tout greater than expected earnings (like anyone cares, MS did this for years, and everyone does it these days), but also, if they gave guidance this quarter that they expected to make so much in profit, and it turns out, for whatever reasons, they made less, there'd be class-action lawsuits accusing apple of investor fraud and all sorts of fun. Also keep in mind that brokers are like those who play the horses. Its trying to read the history and track record and making educated guesses as to what the stock is going to do in this race (quarter).[9] A healthy beat and in-line guidance could set much higher lows and far higher highs. A disappointment however could torpedo these shares with such a big run-up recently. It looks however like investors are girding themselves for more good news, and a focus away from the noise associated with Steve Jobs and his health challenges, and on the company's financial fundamentals instead. If Apple does well today, in its first complete quarter without Steve Jobs in the C-suite, it'll go a long way toward emboldening investors about how this company operates without him, and what happens next in Cupertino.[2] Kaufman rates Apple a Buy. On the conference call, investors will look for forward guidance, hints at new products/applications and commentary on Steve Jobs' health and if he will return as stated at the end of June.[5]
There's also the outside chance that we'll get an update on Steve Jobs' return to the office. Apple maintains that Jobs continues on medical leave and that he's scheduled back at the end of June. Stands to reason that if Apple will be unveiling a new tablet or netbook, or some groundbreaking piece of new hardware, the company would wait for Jobs himself to do the deed, that is if he indeed plans a return to the company.[2] Q.E.D. Perhaps the big question is: unlike the iPhone, will it run Flash? If there were a new GHz -caliber processor -- such as the latest Marvel XScale update -- it would give Apple an excuse to back down from its previous stand. The same arguments could apply to whether it will run Java. Steve Jobs historically was a good friend of Larry Ellison, so perhaps if Oracle ( ORCL ) finally does buy Sun (no deal is certain until it's concluded) Steve will embrace Larry's cup o' Joe.[10] There is also the fact that with the iPhone App Store, after 30 years Steve Jobs finally controls the ISV distribution channel. Plus this puts Apple at the front of the migration of smartphones to be true laptop replacements, rather than late to the cheap sub-notebook party.[10]
Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.[1]
I thought Apple was supposed to be the world's greatest tech stock going. RIM was able to beat it's numbers and got a huge pop on earnings and yet Apple, which is supposed to be magnitudes of a better company than RIM is going to fall flat on it's face. What good are all those Retail Stores, iPhone deferred payments, better than average customer service and huge cash reserve doing for this company and it's investors? What the hell happened to all those iPhones that Munster said Apple was going to sell in 2009. How many?! Up to 45 million of them. Has Apple sold even 5 million, yet? I'm just a little puzzled about how such a great company can't even get a little pop at earnings time.[1] Analysts say a short-term sell-off is possible, assuming that earnings are in line with Wall Street expectations and Apple gives a typically conservative outlook. They also say some investors will continue to buy the stock in anticipation of what the company has in the pipeline.[11] This might be helpful from Piper Jaffray: Over the past 10 quarters, Apple's earnings guidance has been 11 percent below Wall Street expectations on average, meaning Wall Street's consensus is for $1.11, and Piper anticipates guidance of $1 a share.[2] Which means the company could be setting up for a "sell-on-the-news" scenario if guidance comes up shorter than expected. Wall Street is expecting $1.09 a share on $7.95 billion, both categories nicely ahead of Apple's typically conservative guidance of 90 cents to a $1 a share on $7.6 billion to $8 billion.[2] Wall Street expects Apple to boost fiscal second-quarter sales by roughly 6 percent to $7.95 billion, while net profit is expected to slip around 6 percent to $1.09.[11] According to Reuters, Wall Street analysts expect sales to rise by about 6% to $7.95 billion, while net profit is expected to slip around 6% to $1.09.[12]
Analysts surveyed by Thomson Reuters expect Apple ( AAPL - news - people ) to earn $1.09 per share on $8 billion in sales.[13]
Bullish Cross now expect Apple to earn about $5.78 in EPS on $36.591 billion in revenue down from $6.63 in EPS on $41.196 billion in revenue. This reduction in estimates is due in large part to Apple intentionally making it more difficult if not impossible to track iPhone sales using IMEI data. If the third generation iPhone is well received by the consumer this summer or if the economic climate becomes substantially more improved in the latter half of 2009, there is ample room for Apple to handedly beat these estimates.[14] For fiscal Q2 2009, Bullish Cross expects Apple to earn about $1.19 in EPS on $8.318 billion in revenue on a GAAP basis versus the consensus of $1.09 in EPS on $7.94 billion in revenue. The consensus estimates for Q2 are far more fairly stated than they've been in previous quarters.[14]
I maintain a simple spreadsheet on Apple that has been very helpful to me in gauging quarterly reported numbers and guidance. I can easily see the quarter coming in as high as $7.93 billion in sales and $1.16 in EPS. This would be inline with estimates on revenues and above consensus on EPS. My model likely is more positive on gross margins where I am looking for 35% vs. guidance of 32.5% and most estimates between 34% and 35%.[15] The consensus EPS estimate of 1.08 is too low because of the gross margins assumptions being way too low. Last Q was 34.7%, and this quarter will be much higher 36.5-37%, but the consensus estimate implies A gross Margin of around 33%. That's where AAPL will surprise allowing it to beat the EPS number even is Revenue misses. I don't mean to be too cynical, but why should I trust Zacky? He's been trading 6-7 years and is a UCLA law school graduate and???? No offense, I'm sure he's competent, but to be honest I'm a law school graduate and I've been trading for 10+ years, but CNN is not citing my thoughts. I just wonder what position the writer here is trying to push and why he's citing Zacky to do it? Zacky's blog spot photo looks like a guy at a frat party.[1]
Current consensus for June is revenue of $8.26 billion and EPS of $1.11. These estimates are up very slightly from March quarter estimates. This sequential pattern is consistent with the last few years.[15]
Think Equity said that inventories coming into the March quarter in iPods and Macs were seasonal. While AAPL had guided the March quarter down 24% quarter-over-quarter, Think believes the PC market and consumer sentiment improved late into the quarter and an improvement in sell-through could provide an upside to their $7.8B revenue estimate versus company guidance of $7.6B-$7.8B. Think's EPS estimate is $1.17.[5] Looking ahead to Apple's third quarter, the Street is anticipating $1.12 on $8.278 billion in revenue. Look for the company to come in well below that figure since Apple historically has been excessively conservative in its guidance.[2] The figure compares with a consensus view of $1.09 in EPS on $7.9 billion, and official Apple guidance of 90 cents to $1 in EPS on $7.8 to $8 billion in revenue.[9] On a non-GAAP basis, Bullish Cross expects Apple to earn $1.59 in EPS on $8.798 billion in revenue.[14] Assuming a margin of 33.5 percent, Apple is expected to show $8 billion in revenue, producing EPS of $1.13.[9]
Consensus estimates call for EPS of $1.09 on revenues of $7.94 billion.[15]
When Apple ( AAPL ) reported its fiscal 2009 first-quarter earnings, exactly three months ago, the stock opened the day at $78.20, its lowest point since October 2006. When Apple is scheduled to report its second-quarter results, the same shares opened at $122.27 a 56% increase. While that's still below the price targets set by most analysts many of whom revised their targets upward in just the past week some think Apple's share price has got ahead of itself. [3] Back in 1982, you could have purchased 100 shares of this company'''s stock for $160. Those same 100 shares would be worth roughly $92,000 dollars at today'''s split-adjusted share prices. That'''s a 57,400% return, something most people won'''t ever see in a lifetime of investing. Fortunately for us, this company'''s prospects are only looking brighter. It has plenty of space to grow and do it all over again. It won'''t matter whether you'''ve been there from the beginning or jumping into the bandwagon today - the ride looks to be profitable nonetheless. That really sounds like a siren call to own Apple and ride the road to riches! Problem with this argument is SIZE.[16]
Unless I'm mistaken, there's a notable misprint in the fourth paragraph: "Apple exited the December quarter with a very strong balance sheet with $31B+ in net cash per share, including long-term investments." Probably should not have the "per share" part in there! Otherwise, I'll trade someone one of my shares right now for the low price of only 1 billion dollars.[5] I've owned a core position in Apple since early 2005 and just trade around it, mostly by trimming positions on relative strength. Unless the quarter has negative surprise, I stand by my recent thoughts that the shares have upside to at least $150 this year.[15]
Apple exited the December quarter with a very strong balance sheet with $31B+ in net cash per share, including long-term investments.[5]
Think equity's analyst is calling for 11.4 million iPods, 4.7 million iPhones, and 2.9 million total Macs to get to a $1.18 per share number.[15] Page has long maintained a Mac version of Mactracker, compiling specs and history on all of Apple's computers, as well as other peripherals like the iPod, the Apple TV, and even the Newton. The iPhone version of the application brings all this information to your fingertips, conveniently sorted by product line. Tap any model to get information on when the computer was introduced, its model number, initial price, complete system specs, and more. Granted, Mactracker may not be the kind of app you need everyday (well, unless, of course, you maintain an extensive collection of vintage Macs), but since it's free and only a mere 3.4MB, there's little reason not to indulge yourself, if only for the ability to settle that bar bet between you and your buddy over the clock speed of Apple's first PowerPC machine.[17] Without taking into account R&D;, support, and software Apple are known to make a 50% markup on all there hardware. They are sitting with profit while the likes of Dell and HP barely scratch a profit together. If the other pc manufacturers cared more about putting out fewer models with better profit margins they would also fair better in times such as this recession. The same goes for other industries, Barely scraping a profit together does not fill up the bank and is perhaps the biggest lesson to be learnt as well as not borrowing beyond your capability and buying fewer products that will last over many cheep things. (''4 PSU's do not get you as far as OCZ and other premium branded ones though they both do the same job for example.[6] Simply put, Apple management rocks! Like Steve points out, who cares about a slight dip in sales, when overall profit is up, and margins are strengthened? Further, Bears have lost control.[15]
They aren't'secretive' about their sales. They issue forecasts (guidance) at the start of the quarter (what you'll hear in a few days) which will project low. Then there might be adjustments made mid-quarter, but not much (unless they really are going to be lower than projected at the beginning of the quarter). Then they'll announce sales that blow past their guidance, trying to wow the stock people about how well they did. The problem, of course, is that they (not just apple, but all companies) have done this for so long that no one listens to their guidance, and they try to predict their own numbers. Analysts have their 'official' consensus, and their higher but hoped for 'whisper' numbers.[9] Apple following the close of the stock market on Wednesday will report results of its fiscal second quarter of 2009 ended March. Bullish Cross analyst and AppleInsider contributor Andy Zaky is readjusting his outlook on Apple to a view that is more commensurate with the increasingly bleak economic environment. As unemployment continues to rise and discretionary income contracts, Apple will undoubtedly struggle to keep up its explosive growth in 2009.[14] Munster, a senior research analyst at Piper Jaffray, is one of Apple's strongest supporters among the mainstream analysts. Zaky, who writes a blog called Bullish Cross, is best known for his quarterly analyst smackdowns, in which bloggers who follow the stock challenge the pros to do a better job than they at predicting Apple's numbers.[1]
Piper Jeffrey analyst Gene Munster sees still a $180 price target for the Apple stock according to CNN.[12] Apple's shares have surged about 50 percent to above $120 since touching a 52-week low in January, leading some to wonder how much momentum is left in the stock given the uncertainty in the economy.[11]
There are several things that could kick-start Apple's growth. Like if the rumors are true that Apple is about to cut an iPhone deal in China, or that it's set to unveil a new family of iPhones, or that it's working on a new device that will be its answer to all those $400 netbooks or that the global economy has turned a corner and started to recover.[3] Apple is already a $100 billion dollar company. A growth of 57400 % would imply a market valuation of $57 trillion, or 4 times the current U.S. GDP. That'''s also close to the total world GDP! Trust me, it AIN'''T gonna happen in your lifetime.[16] I own multiple Apple products, and am a regular visitor to the Mac store. I'''ve thought of owning Apple stock, but have not done so because everyone I know is so admittedly smitten by them. When a company is that well known and loved, a lot of its growth is already baked in.[16] SAN FRANCISCO (Reuters) - Apple's earnings report this week will draw the usual scrutiny of investors, but they may already be looking ahead to what the iPhone and Mac maker has in store for the coming months. The company has so far proved relatively adept at selling its products in a tough economic environment, even as some of its peers have struggled.[11] Apple Inc., maker of Macintosh computers, iPods and the iPhone, is expected to report a small drop in quarterly earnings after the closing bell Wednesday as the economic downturn and an anticipated replacement for the iPhone compounded a seasonally slow quarter.[13] You know Apple ( AAPL ) is in for a bumpy quarter when both Gene Munster and Andy Zaky sound bearish notes in advance of the company's fiscal Q2 earnings report due out Wednesday after the markets close.[1]
The pressure is on COO Tim Cook (standing in for Steve Jobs) and CFO Peter Oppenheimer to report Q2 results that surprise the skeptics, chart a path for growth and offer guidance for Q3 that, while dutifully conservative, reflects a little more confidence in Apple's future. Apple will report its earnings on Wednesday after the markets close.[3] Apple shares trade off following the earnings report more often than not. With the expectations bar at a high level that seems like the most likely scenario this time.[15] Wu warns that Apple shares are likely to be "volatile" around the time of the official earnings report.[9]
I'm just hoping Apple shares don't tank. I still think if RIM was able to do well on it's last past earnings, Apple should be able to do well, too.[3]
Given the relatively high lack of transparency with regard to iPhone and Macintosh sales going forward, Bullish Cross holds an increasingly cautious view with regard to Apple's fundamentals and earnings estimates in 2009.[14] Forty-eight more are expected to follow in the months after that. Apple sold 1 million iPhone 3Gs in its first 3 days on sale.[18] My forecast: Apple will report sales of 2.2-2.3 million Macs, beating (just barely) the Street'''s estimates.[7] "The downturn in Mac sales won't stop anytime soon: Marshall projects that Apple will see a 12% decline in computer sales in the quarter ending June 30," Keizer reports. "But he is optimistic that the worst is already behind Apple, if not the Mac."[4] Marshall predicts that the downturn in Mac sales will continue throughout the next quarter and decline by a further 12 per cent. Coincidently, this will be about the time that Jobs will get off sick leave and return to the company. Spinners will then claim it is his magic that will turn everything around.[6] Below the fold: more Zaky charts, including operating expenses by quarter and Mac sales by region.[3]
For Q2, Think is looking for iPod units at 11.4M, iPhone units at 4.7M, and total Mac sales of 2.9M units.[5] The firm's target is $140. Kaufman Bros. said sales of Macs seemed stronger than it expected in Q2, while iPod and iPhone sales met the high end of its estimates.[5] Commentary about the quarter has grown increasingly positive amid indications that Mac and iPhone sales have held up better than expected given seasonality and the tough consumer economy.[15]
U.S. Mac shipments slipped about 1 percent in the quarter, according to researchers at IDC and Gartner Inc. ( IT - news - people ) Analysts are divided on whether the Cupertino, Calif. -based company sold as many iPods, iPhones and Macs as expected.[13]
Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich.[1] One can interpret the recent research data as indicating that Apple could sell about 10.5 million iPods, 2.45 million Macs and about 3 million iPhones.[14]
To satisfy the street, I think Macs must come in at 2.1 million plus units, iPhones at 3.8 million units, and iPods at 8.5 million plus units.[15] I also think that the company will announce sales of 10-11 million iPods and at least 3.3 million iPhones.[7]
All the vendors are doing poorly and yet Apple is doing relatively better than the rest. Did any computer company manage to increase sales in this quarter? Probably not. Apple is likely in the best position over all of them.[3] Margin expansion, new products, the health of Apple's surprisingly robust retail strategy and an update on how sales are going with the new pricing structure on iTunes will get the lion's share of attention.[2] "Even if the Mac sales are flat. Except it's estimated to be a drop in share as well as sales.[4] "Various analysts have pegged first-quarter 2009 Mac sales at the same general level, from 2.1 million to 2.2 million machines.[4] "Within a sluggish global PC buying environment where Netbooks are gaining momentum, checks suggest sales of premium-priced Macs appear to have moderated," RBC analyst Mike Abramsky wrote in a research note Monday. It's not just Macs that have lost their luster. As TheStreet pointed out last week, the iconic iPhone is entering its third year, a difficult milestone, and typically the last year of life expectancy for hot gadgets.[8]
Analysts expect a 33.1 percent gross margin, up slightly from a year ago. "I think this quarter might be less eventful than most, almost regardless of what the earnings are, because there's so much pent-up expectation," said Pacific Crest Securities analyst Andy Hargreaves.[11] Scheduled to announce the details late Wednesday, Apple should do fairly well in its second fiscal quarter for 2009, argues Kaufman Bros. analyst Shaw Wu. Low components prices are forecast to push gross margin beyond a guided 32.5 percent, which in turn is prompting Kaufman to raise its other estimates.[9]
The Street expects Apple to report that it shipped 3.3 million units in the quarter, nearly doubling last year's Q2 shipments of 1.7 million. That may not be enough to make up the difference.[3] In 2008's first quarter, Apple sold nearly 2.3 million Mac laptops and desktops."[4] MacDailyNews.com article summary: Apple Inc. on Wednesday will report that it sold fewer Macs in the first quarter of 2009.[4]
Apple traditionally posts poor numbers in the first calendar quarter, which comes after the holiday selling season of the year before.[4] People just went crazy, having in mind that it was only a year after the first generation had been launched. Practically there was not enough time for people in Austria (original iPhone officially was launched in spring 2008) to get scratches on their phones. What is the rush all about, anyway?! A regular American folk would say - "It's an Apple mobile phone! Now that I have been using Apple goods all of my life, I can finally throw the thick shell-like cell, and have the divine sleek perfect peace of electronic."[18]
Apple ( AAPL Quote ) reports its fiscal second-quarter earnings after the bell Wednesday, and the chances of a big positive surprise are as slim as the rumored new iPhone.[8] Apple ( AAPL ) is expected to report Q2 earnings after the market close on Wednesday, April 22, with a conference call scheduled for 5:00 pm ET.[5]
We added on our position with Apple on Monday, & are watching closely to add after the earnings call. Sellers beware; I know a lot that are looking to ADD to their positions tomorrow, so be careful, you may not be able to get back in quick enough after selling, to make the sale meaningful.[15] MacDailyNews Take: One would assume the recession will have had some effect on Apple's unit sales.[4]
The WSJ even claims Steve Jobs is actively shepherding the project.
Given Apple's ( AAPL ) recent track record, I'm sure it will be cool and will probably send lots of units.[10] Much will be made about a 20% drop in iPod units but I have always advocated for the idea that iPhones are self-cannibalizing iPods in a positive manner for Apple shareholders.[15] No one from Apple's customer support could give me an explanation, why I cannot download the latest U2 album on my iPod touch. There is no point paying BGN 819 for an iPhone 3G and not be able to update its software and applications.[18] Many people around the world expect the revealing of the new iPhone 3G from Apple.[18] Next Event: Analysts expect Apple to unveil a new iPhone at a developer conference in June.[5]
Apple manages to stay attractive for investors as the hype machine is growing for the new iPhone 2009 launch in June.[12] Investors will parse Apple executives' comments for evidence that a new iPhone is being readied for June.[13]
Apple's vaunted secrecy enables it to spin or saying nothing (a different type of spin) on good or bad news. If they come out looking good then the analysts should look bad. That doesn't seem to make any sense to investors for institutions who jump all over the place.[9]
"Apple made only modest efforts toward new product introductions late in the March quarter -- perhaps too late to make a significant impact," Majestic Research analyst Rick Klugman wrote in a recent note.[8] Apple has historically had the ability to jump 80-100 points in just a few months. (Like August - December 2007 Remember?) Apple's new products and product cycle means a stock build up to June.[10] As long as there is fantasy that the new iPhone will be a huge hit the Apple stock will rise even higher.[12]
As usual with Apple the stock will react to guidance unless the quarterly numbers are a major surprise. The stock has rallied sharply this year, up about 40%. This dramatically raises the expectations bar for short-term traders.[15] Maybe then CNN will cite you. Attacking the coverage someone else gets based on their photo, school and fewer years of exp. than you, without posting your own online track record of analysis? Not a great start. Gene has been sport on about this company. He was telling to buy at $85 and he's been saying trim (not sell all) from $105 to $120. If Gene is getting less bullish on the stock it's probably time to sell.[1] The average Apple computer sells for about $1,400, or more than three times the price of a netbook.[8] Brokers buy/sell on the whisper, not the public consensus, and certainly not on company guidance. If Apple sells better than they said they would, but less than what the market was whispering, the price will go down.[9] The firm is expecting the gross margin at 33%, slightly better than company guidance of 30%, but says a pick-up in component prices, especially NAND and stable panel prices, could negatively impact margins.[5]
While Windows PC makers slashed prices in the face of a worsening economic crisis, Apple held the line. Its quarterly U.S. computer shipments fell about 1% from a year ago, better than the 3% decline in the U.S. overall, according to research group IDC.[5] The Kaufman price target for Apple remains at $152.[9] Apple shares hit a trough back on March 9, along with everyone else, closing at $83 and change that day.[2] Macs due to market share gains and iPhones due to share gains and very strong smartphone penetration. Confirmation of these trends could take Apple shares higher.[15] Shares have been off to the races with the kind of hockey stick performance Apple investors really haven't seen in some time.[2] Disclosure : No Position in Apple. It turns out that Zaky, who has been heavily invested in Apple all this time, has sold his shares.[1]
Apple stock is going to skyrocket, your buy in time is NOW (actually Monday would have been good, but better late then never! :-) ) Bull market rally in the whole market; Bears will be forced to cover by Friday.[10] The Apple stock has done quite well despite the bad economy in the last months.[12] Up 50% in a 30% up market for a high beta stock like Apple (Beta is 1.5) is par course for the stock).[16]
Then we had the legendary iPhone release and the stock shot up to $200.[16] I had already suspected that because Apple hates to cannibalize itself -- so selling an expensive iPhone will not steal business from the $1000-2000 MacBook line.[10] There is no customer support for Bulgaria. "That is the official Apple policy", merchants say. It is strange to have official stores with official Apple products, and official iPhone 3G introduction, and still no official Apple policy towards Bulgarian customers is offered.[18] The up-to-date information and entertainment flow is Apple's philosophy. Or at least that is one of its philosophies. That is the purpose of iPhone 3G. That is its power. That is how it made millions of people go crazy about it.[18] What about the rest of the world? People outside the U.S. are not bonded to Apple. There must be something else that makes them crave the iPhone 3G. Imagine that you have a centimeter thick, 133 grams device that combines everything.[18]
IPod shipments are also expected to shrink a 6% decline, to about 10 million units. The iPhone which was supposed to fill the gap is still on its growth curve. [3] The key numbers as usual: Total Mac shipments with a consensus of 2.24 million units; iPod shipments of 10.8 million units; and 3.4 million iPhones.[2] Mac shipments are now being pegged at 2.3 million instead of 2.2, while iPod numbers may hit 10 million rather than 9.8. iPhone predictions are currently 3.2 million, over previous suggestions of a flat 3.[9]
Margins will be higher due to higher percentage of iPhone and iPod touch sales. [5] International sales (weak USD) and strong software sales (iLife and iWork releases in January) should save/improve the profit margin, fail to see component prices outweighing that.[5]
"Apple has clearly outperformed, so the question is do you take profits here?" said Kaufman Bros analyst Shaw Wu.[11] I'm impressed with Zaky. Obviously he is an Apple booster who knows when to take a profit - a rare breed.[1]
Quit selling the $200 more expensive MiniMac just because it has more 1 more gig of ram and a little bit bigger HD (worth about $50-$75) Lastly the video ram. All apple did was cripple the cheaper MiniMac video ram access since both use the same Nvidia 9400M chip to make punters think they are getting better video. [6] "I don't think that investors who have been buying it between $80 and $120 are going to move, because typically you want to be there for new product cycles," Hargreaves said.[11]
I would not be surprised to see upside on revenues emanating from iPhones or better than expected iPod ASPs due to the Touch. It should be noted that projecting iPhone revenue is a tricky exercise. [15] If it ships in the June quarter, it would seem there would be some upside to revenue although it is important to remember that iPhone revenue is recognized over 8 quarters.[15]
To the tech press community, any slide in Mac sales or revenue means the sky is falling and the sun will go supernova, i.e. the "end of the road" for the Mac.[4] In early 2008, for example, Mac sales were off about 1% from 2007's fourth quarter."[4]
Analysts estimate about 2.2 million Macs were sold in the quarter that ended last month. That would be down 11% sequentially and 2% below the year-ago period.[8]
March 20, 2009, Bulgaria. iPhone is officially launched in Bulgaria for the first time by the second biggest mobile services company, Globul. [18] The first obstacle that an Apple device user in Bulgaria faces is the lack of customer support.[18] After the introduction of the first iPod (a mobile media player device), Apple just changed the world of mobile media players. It is a gift from the gods to have a phone carrying the bitten apple sign.[18] While Apple's iPod Touch continues to be popular, the iPod line itself lacked a refreshing makeover.[8]
Along with plenty of other people who've been under contract for the iPhone's first two years. Did you mean Thomson or Thompson? It's usually Thomson quoted in earnings previews, that's why I'm asking. [3]
SOURCES
1. Bearish grunts from a pair of Apple bulls - Apple 2.0
2. Apple Gets Ready to Open Its Books - Tech Check with Jim Goldman - CNBC.com
3. Apple's Q2: A test of fundamentals - Apple 2.0
4. MacDailyNews - Analyst: Apple to concede Mac unit sales shrinkage, but the worst is over
5. Earnings Preview: Apple -- Seeking Alpha
6. Apple has to fess up on shoddy sales today - The Inquirer
7. Macsimum MacOSG Forums • View topic - The Sellers Research Group'''s take on Apple'''s financials
8. Apple's Second Quarter: Neither Golden Nor Delicious | Technology | Financial Articles & Investing News | TheStreet.com
9. MacNN | Apple Q2 results forecast to top guidance, consensus
10. Betting Apple's New Netbook Is a Big iPhone -- Seeking Alpha
11. Apple investors look beyond earnings | Reuters
12. Apple Q2 Earnings Call scheduled for Wednesday, no Disappointment expected
13. Ahead of the Bell: Apple to post 2Q earnings - Forbes.com
14. AppleInsider | Apple to report second quarter earnings on Wednesday
15. Apple Earnings Preview - Good Expectations -- Seeking Alpha
16. Apple (Nasdaq:AAPL) Stuck In A Trading Range?
17. Mactracker for IPhone, for All Your Mac Reference Needs - PC World
18. Bulgaria: iPhone 3G in Bulgaria. Too soon or too late? - Novinite.com - Sofia News Agency
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