Piper Jaffray raises estimates for Apple's Sept quarter

[AppleInsider]

Investment bank Piper Jaffray boosted its estimates for Apple's current quarter on Monday, noting that iPhones will for the first time account for a material portion of the company's booked revenue.

Citing recent NPD market data as the driver behind his modifications, analyst Gene Munster now expects the Cupertino-based company to report earnings of $1.17 on revenue of $8.37 billion, driven by sales of 2.8 million Macs, 11 million iPods, and 5 million iPhones.

That's up from his previous estimate of $1.04 in per share earnings on revenues of $7.9 billion from sales of 2.5 million Macs, 10.8 million iPods, and 4.1 million iPhones. The Street consensus is $1.11 in per share earnings on revenues of $8.07 billion.

Separately, Munster noted that the soon-to-end September quarter marks the first time the iPhone will account for "a meaningful percentage" of Apple's booked revenue.

"Last quarter (June) it was 4 percent, and this quarter (Sept) we are modeling for it to be 21 percent," he wrote.

As such, the analyst also published a new metric to help investors quantify the full impact of iPhone sales by assuming revenue from each model is accounted for at the time of sale, rather than spread over the course of 2 years per the company's current accounting practices.



"We are calling this booked EPS and revenue," Munster said.

He estimates Apple would report per share earnings of $1.60 on revenue of $10.15 billion for the September quarter under that model, which would mimic the way the company accounts for sales of Macs, iPods, and almost everything else in its product portfolio.

Munster maintained his Buy rating on Apple shares with a price target of $250.

[ View this article at AppleInsider.com ]

[ByronVanArsdale]

This is great news. Apple continues to expand their customer base via iPods and iPhones as it continues to innovate around OS X and computers. Way to go Jobs and Company! Now, about the new MBP.......

[macapptraining]

apple will continue innovating and creating new little gadgets for consumers to indulge in keeping them on top and growing. looking forward to the future apple (snow leopard).

[freelander51]

Originally Posted by AppleInsider

Investment bank Piper Jaffray boosted its estimates for Apple's current quarter on Monday, noting that iPhones will for the first time account for a material portion of the company's booked revenue.

Piper Jaffray must be Last Man Standing of the Investment Banks as we know them right ?

I am surprised they still are active and trading. Guess they did not expose themselve too much to dodgy mortgages...

[mswift801]

i'm happy to see apple getting its time in the sun on wall street... but these investment banks with their forecasts and estimates are part of the reason we're in this financial mess.

investments banks = greed machines. and i used to work for robertson stephens, an investment bank that went belly up in 2002. so i know how they work inside. the age of investment banks is over, and good riddance.

[dreyfus2]

Originally Posted by AppleInsider

As such, the analyst also published a new metric to help investors quantify the full impact of iPhone sales by assuming revenue from each model is accounted for at the time of sale, rather than spread over the course of 2 years per the company's current accounting practices.

Unless I missed something completely... The reason for the deferred accounting was "free software updates" (as with the Apple TV), not the revenue sharing model. I have not heard SJ mention the end of free software updates. Did they guess deferred accounting is discontinued - or do they know something that has not been previously posted (or have I been hibernating)? During the last conference call they have only mentioned that they will account for the models being sold after the software 2.0 announcement after it is released (so quite some Q2 sales will appear in Q3), no mention of changing the accounting model was made? I also do not think changing this practice would be in line with the predicted drop in margins?!

[cameronj]

Originally Posted by mswift801

i'm happy to see apple getting its time in the sun on wall street... but these investment banks with their forecasts and estimates are part of the reason we're in this financial mess.

investments banks = greed machines. and i used to work for robertson stephens, an investment bank that went belly up in 2002. so i know how they work inside. the age of investment banks is over, and good riddance.

Is there a company out there that is not a greed machine? That's the idea, right? Greed is good, don't you know

[cameronj]

Originally Posted by dreyfus2

Unless I missed something completely... The reason for the deferred accounting was "free software updates" (as with the Apple TV), not the revenue sharing model. I have not heard SJ mention the end of free software updates. Did they guess deferred accounting is discontinued - or do they know something that has not been previously posted (or have I been hibernating)? During the last conference call they have only mentioned that they will account for the models being sold after the software 2.0 announcement after it is released (so quite some Q2 sales will appear in Q3), no mention of changing the accounting model was made? I also do not think changing this practice would be in line with the predicted drop in margins?!

They are not assuming that the deferred accounting model is changed, they are just providing two sets of numbers to their clients (and the public) ("THEY" being the iBank, not Apple of course) to help people better understand the true business that's going on at Apple.

It must be tough sticking to a $250 price target right now, and they're doing everything they can to point out the positives.

[anantksundaram]

Originally Posted by freelander51

Piper Jaffray must be Last Man Standing of the Investment Banks as we know them right ?

I am surprised they still are active and trading. Guess they did not expose themselve too much to dodgy mortgages...

Funny you should bring that up: In the midst of (and in spite of) all the carnage in financial services stocks this past week, Piper Jaffray is actually up about 25% since market open last Monday (Sept 15)!

Go figure....

[Foo2]

Originally Posted by dreyfus2

Unless I missed something completely... The reason for the deferred accounting was "free software updates" (as with the Apple TV), not the revenue sharing model. I have not heard SJ mention the end of free software updates.

You've got that backwards. The deferred accounting is the rationale behind free software updates for the iPhone. And the stated reason for the deferred accounting is to smooth out the revenue stream. The reason Apple would want a smooth revenue stream is to make the revenue appear more stable--despite lapses between new product launches and upgrades--and for the stock to appear a more stable investment.

[mdriftmeyer]

Originally Posted by freelander51

Piper Jaffray must be Last Man Standing of the Investment Banks as we know them right ?

I am surprised they still are active and trading. Guess they did not expose themselve too much to dodgy mortgages...

They are under their parent company, UBS and I'm trying to figure out why AI still calls them Piper Jaffrey seeing as that company switched it's name to UBS the last time I checked on one's stock portfolio.

[success]

good luck on that. See you at $99 or $75 when reality sets in.

[anantksundaram]

Originally Posted by success

good luck on that. See you at $99 or $75 when reality sets in.

Oops.... sorry; wrong 'reply'.... took it back.

[anantksundaram]

Originally Posted by mdriftmeyer

They are under their parent company, UBS and I'm trying to figure out why AI still calls them Piper Jaffrey seeing as that company switched it's name to UBS the last time I checked on one's stock portfolio.

http://finance.yahoo.com/q/pr?s=PJC

[cameronj]

Originally Posted by mdriftmeyer

They are under their parent company, UBS and I'm trying to figure out why AI still calls them Piper Jaffrey seeing as that company switched it's name to UBS the last time I checked on one's stock portfolio.

Does that mean that when I go eat at Pizza Hut I have to call it a Yum Brands restaurant? Piper Jaffrey is still very much an operating entity and a brand name, there'd be no reason to call it UBS, because it is not UBS. It is owned by UBS.

[kiwirob]

You know if Apple decided to use just 10 billion of it's 20 billion odd cash reserves to buy back some shares at this level Gene's expected reported earnings of $1.17 and booked earnings of $1.60 would become reported earnings of $1.27 and booked $1.74 per share.

All that and they would still have 10 billion cash left over to a rainy day.

Having all that cash is making me a little weary. I'm not sure exactly where it is sitting and how safe it is. Does anybody know? Perhaps it's in T-Bonds or another government backed security earning all of 2-3% interest. At todays market cap that's like 17% of the value of the company earning sweet fcuk all.

Unless Apple is saving up to buy Adobe or another $20B valued company why keep all the cash. From an opportunity cost perspective not buying back shares is kinda hurting EPS.

[EyeNsteinNo]

In other news today the MS board ok'd a plan to buyback $40B in stock by Sept 30, 2013.
With 9.13 billion shares outstanding if they wait till Sept 29, 2013 to do the buyback all at once the stock would be around $4.38 a share compared to today's $26 and some change. Bill would be worth less than 10 billion. Would have to go to Jerry S. for a loan because he bought Apple stock today. lol

I get UBS confused with USB... seems UBS could mean a lot things.

[retiarius]

Originally Posted by kiwirob

Having all that cash is making me a little weary. I'm not sure exactly where it is sitting and how safe it is. Does anybody know? Perhaps it's in T-Bonds or another government backed security earning all of 2-3% interest..

Yes, the 10Q/10K shows that the cash sits in a combination of treasuries, government "agency"
debt, and corporate paper rated A or better, all of relatively short (max 1-2 years) duration.

Do a web search for Braeburn Capital, Apple's subsidiary, incorporated in Nevada to avoid
California income tax on the interest accrued. It's like a giant money market fund. Normally,
it would be a lost opportunity cost if you know you can make more than 2-3% tax free.
Apple regularly answers questions about potential use of this cash for buybacks,
dividends, or acquisitions with "our board-of-directors is thinking about it".

[anantksundaram]

Originally Posted by kiwirob

You know if Apple decided to use just 10 billion of it's 20 billion odd cash reserves to buy back some shares at this level Gene's expected reported earnings of $1.17 and booked earnings of $1.60 would become reported earnings of $1.27 and booked $1.74 per share.

All that and they would still have 10 billion cash left over to a rainy day.

Having all that cash is making me a little weary. I'm not sure exactly where it is sitting and how safe it is. Does anybody know? Perhaps it's in T-Bonds or another government backed security earning all of 2-3% interest. At todays market cap that's like 17% of the value of the company earning sweet fcuk all.

Unless Apple is saving up to buy Adobe or another $20B valued company why keep all the cash. From an opportunity cost perspective not buying back shares is kinda hurting EPS.

By extension of this logic, if they bought back all the shares, they could make the EPS equal to infinity, no?

[teckstud]

Yes, but what will this soothsayer foretell about the 4th quarter? Will people want homes, gas, or iPods?

[kiwirob]

Originally Posted by retiarius

Do a web search for Braeburn Capital, Apple's subsidiary, incorporated in Nevada to avoid
California income tax on the interest accrued. It's like a giant money market fund. Normally,
it would be a lost opportunity cost if you know you can make more than 2-3% tax free.
Apple regularly answers questions about potential use of this cash for buybacks,
dividends, or acquisitions with "our board-of-directors is thinking about it".

Thanks for the info on Braeburn Capital. Did a search, but not too much detailed info about it on first glance.

Originally Posted by anantksundaram

By extension of this logic, if they bought back all the shares, they could make the EPS equal to infinity, no?

Well most spreadsheet would throw a wobbly. They don't like dividing by zero much.

Oh and they don't have enough free cash to buy back all their shares either and dong so would be impossible.

Even if they had a near infinite supply of cash they couldn't buy back all their own stock because as they kept buying more shares the value of those shares would keep raising, kind of in the same way that friction continues to get infinitely great as one attempts to accelerate to the speed of light, prohibiting it.

[monstrosity]

Originally Posted by kiwirob

At todays market cap that's like 17% of the value of the company earning sweet fcuk all.

Apples cash earns them quite a tidy profit if memory serves correct, far from sweet fcuk all. It aint just sat there.