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JP Morgan: Apple's 2Q 2011 revenue estimate raised to $24.42 billion

post #1 of 16
Thread Starter 
Ahead of Apple's quarterly earnings call on Apr. 20, investment bank J.P. Morgan has raised its projections of Apple's earnings through 2012 in expectation of continued growth from the iPhone and iPad.

J.P. Morgan analyst Mark Moskowitz issued a note to investors early Friday with the revised estimates, reiterating the firm's Dec. 2011 price target of $450 and Overweight rating of Apple. Moskowitz raised his projections for Apple's EPS for the second quarter of fiscal 2011 to $5.39, up from $5.21 and increased his revenue estimate for the March quarter from $23.83 billion to $24.42 billion.

According to Moskowitz, the Street consensus for the quarter stands at $23.26 billion in revenue and $5.38 EPS.

By comparison, in the first quarter of fiscal 2011, which included the retail-heavy holiday season, Apple reported a record $26.74 billion in revenue. In the year ago quarter, Apple beat Wall Street expectations with $13.5 billion in revenue.

While cautioning that "the law of large numbers stands to diminish the relative magnitude of earnings beats exhibited in years past," Moskowitz noted that Apple's growth trends "will be too big to ignore."

In particular, Moskowitz cited research indicating that Apples iPhone shipments were stronger than expected, aided by the launch of the Verizon iPhone and "broader channel fill" for the GSM model. J.P. Morgan now sees Apple as having sold 18.4 million iPhones in the second quarter of fiscal 2011 versus 16.6 million units previously.



Moskowitz referenced a note from earlier this week where he suggested that the CDMA iPhone could represent a $9 billion opportunity for Apple in 2012, adding that non-Verizon CDMA are expected to play an important part in the sustained growth of the iPhone.

Though Moskowitz cautiously lowered iPad estimates for the March quarter from 6 million to 5.4 million over concerns that the iPad 2 launch resulted in a "temporary stall-out" in shipments, the analyst asserted that the issue was "timing related and not structural." The firm remains confident in the continued growth of the iPad and has raised its calendar 2011 iPad estimates to 31.3 million, up from 29.1 million previously.

In March, Moskowitz warned that technical and form factor improvements made by Apple to the iPad 2 could cause a "bubble burst" for other tablet manufacturers, especially for late-to-market copycats who are trying to secure components with "inflated build plans." Just days after a blowout iPad 2 launch, Moskowitz declared that Apple had an "insurmountable lead" in the tablet market.

In Friday's note, the analyst downplayed concerns that the upcoming rebalance of Apple's share of the Nasdaq-100 index would have a lasting effect. Moskowitz estimates that the changes will result in about 8 million shares of Apple stock being sold by index funds and passive managers, which amounts to just half of Apple's daily trading volume.

Moskowitz also revised Mac unit estimates slightly upward for the quarter, projecting 32 percent year over year growth for a total of 3.89 million Macs sold, compared to a previous estimate of 3.85 million. Citing conversations with industry participants, Moskowitz predicted that the MacBook Air will continue its "break-out performance" from the first quarter of fiscal 2011.



Given the possibility of disruption to Apple's supply chain as a result of the Japan earthquake and tsunami in March, Moskowitz warned that Apple's gross margins will likely decline in the near to mid-term. This could also be exacerbated by the growing portion of Apple's revenue derived from the iPad, since the iPad's margins are generally lower than Apple's other product lines.

Regarding the iPod, Moskowitz restated his position that the sales are likely to decline due to cannibalization from the iPad and iPhone. The analyst lowered unit estimates for the March quarter from 9.6 million to 9.1 million, while noting that growth from the Mac, iPhone and iPad lines should "more than offset the chronic decline of the iPod over time."

By way of comparison, analyst Mike Abramsky with RBC Capital Markets sees Apple selling 7 million iPads, 17 million iPhones and 3.6 million Macs in the second quarter of fiscal 2011.

Apple is set to reveal its quarterly earnings for the second fiscal quarter of 2011 on a call next Wednesday, April 20. The call will begin after the market closes, at 5 p.m. Eastern, 2 p.m. Pacific.
post #2 of 16
I think it’s about 2-3 billion too low.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #3 of 16
Market share and revenue continues to grow. Share price continues to shrink.
post #4 of 16
Quote:
Originally Posted by Constable Odo View Post

Market share and revenue continues to grow. Share price continues to shrink.

It's an anti-bubble, from a parallel financial universe!

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #5 of 16
Quote:
Originally Posted by Constable Odo View Post

Market share and revenue continues to grow. Share price continues to shrink.

i'm pretty sure most of this is due to the NASDAQ redistribution that will occur at the end of the month. once this blows over, there will be an enormous buying opportunity for AAPL investors.

we will also likely see a rise leading up to the earnings call next week.
post #6 of 16
I tend to believe Roger McNamee's assessment on the Japan issue not playing too much into the tech sector for all the reasons he gave. See other post regarding his commentary.
Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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post #7 of 16
Quote:
Originally Posted by AppleInsider View Post

Regarding the iPod, Moskowitz restated his position that the sales are likely to decline due to cannibalization from the iPad and iPhone.

Larger iPod Touch would revitalize the product.
post #8 of 16
I am surprised how many people interchange projections and estimates. This is especially true about the supposed "quarterly projections" report card.

Projection is used more properly when the event or duration has not yet transpired.

Estimate is used more properly if an the event or duration has already transpired but can only guess rather than have a reliable (precise) value of the data, e.g., sales figures, actual number of production, etc.

Thus, one may make short term projections, e.g., the future sales number or income for any product or total during the coming quarter or the year 2011 (although this has already started), or succeeding quarters and longer term projections for the coming years.

However, one is only "estimating" values for the January-March 2011 quarter.

If you look at the "report card of analysts" conducted by Fortune (?) and other amateur analysts, you will find that most of the data masquerading as "projections" were just about the end of the quarter already transpired, and many just a few days before Apple does its quarterly conference calls.

One with more sources of information or spend more dilligence or use more methodical mathematical algorithms will get better estimates for the previous quarter before the actual figures are announced by the company, e.g., Apple on 20 April 2011.

The data provided is not a measure of one's ability to "project" or divine the outlook of the company or industry in question.

The ability to project more precisely is the measure of a good analyst. Many fail in this regard because of bias, limitation in their analytic faculties or just because there are so many unforseen factors.

Many also mistake that the past and present necessarily defines the future direction of events and technology. In reality, disruptive inventions and discoveries, or sometime even random events and events can alter the direction of the future.

Imagine for example if Amelio (?) never enticed Steve Jobs back to Apple. Or, if Jony Ive was never hired by Steve Jobs. That is true also for the other key personnel, and perhaps even the lesser personnel at Apple.

One can be a visionary but cannot exist in a vacuum. The time and the environment impact the realization of the vision.

What could have happened if the telecom company (now AT&T) because of its own desperation has not agreed to acceed to all the demands of Steve Jobs, in order to have exclusive deal of what was to become the disruptive iPhone. Many "pundits" considered this a very grave misjudgement of Steve Jobs/Apple.

In fact, the iPhone may never have become reality. But, even the latter statement is sheer speculation of what could have been or might not be.

CGC
post #9 of 16
Quote:
Originally Posted by matrix07 View Post

Larger iPod Touch would revitalize the product.

It's called the iPad. Teens everywhere want iPads. Devs have enough on their plates with a third screen size in this portable iOS range. That and three sizes would confuse the vast majority of consumers. Apple likes to distinguish products from one another. I called the iPad having a 10" screen before it was released for these very reasons - it's in its second year and people around here have still yet to understand this. If you are waiting for a 6 or 7" iPod touch / iPad mini you'll have a very long wait.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #10 of 16
this is for the "slow" quarter of the year, right? That means Apple is going to easily top $100 billion revenue for the year.

Wow.

USA Today ran a story yesterday asking if Apple could reach a market share of $1 trillion

http://www.usatoday.com/money/perfi/...rket-value.htm

The main part

Quote:
Can that happen? Let's first take a look at how fast the stock has risen the past five years. Apple stock rose 18% in 2006, 133% in 2007, it fell 56% in 2008, but then added 147% in 09 and 53% in 2010. Taking the geometric mean, we get a rough average increase of 59% a year.

If the average 59% annual growth rate of Apple's stock continues, the company could be worth $1 trillion in as little as three years. That's the optimistic case.

If you use the analysts more conservative 23% price target for 2011 and apply that going into the future, then Apple will hit $1 trillion in six years.

$24 billion is more than 59% growth, right?

Q2 2009 - $9 billion revenue, $1.6 billion profit
Q2 2010 - $13.5 billion revenue, $3 billion profit
Q2 2011 - $24.4 billion revenue, $5 billion profit? that's 67% revenue and earnings growth year over year Basically they took the last two years worth of Q2 sales and earnings and combined them into this Q2.
post #11 of 16
Quote:
Originally Posted by Ireland View Post

It's called the iPad. Teens everywhere want iPads. Devs have enough on their plates with a third screen size in this portable iOS range. That and three sizes would confuse the vast majority of consumers. Apple likes to distinguish products from one another. I called the iPad having a 10" screen before it was released for these very reasons - it's in its second year and people around here have still yet to understand this. If you are waiting for a 6 or 7" iPod touch / iPad mini you'll have a very long wait.

You have a good point but I believe there's a large enough market for 6-7" device. Lighter. Smaller. Cheaper. All these qualities are good. It could be mobile game platform. It could be perfect GPS unit in car. It could be perfect remote control. And on and on. iPod Touch is not a phone. It don't have to be that small.
I don't think Apple should leave this market segment open all to competitors but we'll see. One thing I know for sure we would buy one if they'd build one.
post #12 of 16
The numbers look low, particularly earnings per share.

JP Morgan: $24.42B revenue, $5.39 EPS
Apple Finance Board Index: $25.746B revenue, $6.39 EPS

Here are a few individual AFB contributors:
Patrick Smellie: $25.716B revenue, $6.35 EPS
Alexis Cabot: $24.977B revenue, $6.26 EPS
Andy Zaky (also w/Bullish Cross): $24.733B revenue, $6.20 EPS

The Street blew it last quarter. The bloggers were more accurate.

My Wild Arsed Guess: $25.0B revenue, $6.20 EPS. I'm bookmarking this thread, just to see how badly I do.
post #13 of 16
Quote:
Originally Posted by Constable Odo View Post

Market share and revenue continues to grow. Share price continues to shrink.

They are different things.

Market share and revenue are historical measures. They are backward-looking.

Share price is based on future prospects. It is forward-looking.


Forward-looking estimates include projections for products that do not yet exist. Small changes to projected growth can have large effects on stock price.
post #14 of 16
I feel like Apple may have it's first quarterly stumble in quite some time. No specific thing I can pin it on, but my opinion is unit sales across most product lines will be at or below the consensus estimates. And before the usual suspects start shaking fists and asking for sources. . . There isn't any. It's my opinion, but hear me out before judging.

When Apple pulled a minor surprise and announced the iPad2, and on top of that made it available earlier than expected by many, I feel it was more to usurp the media attention than part of their original plan. Samsung and Motorola were both reading the launch of their own tablet products. In fact I think the Motorola press event was already planned just a couple days later. Apple came out of the blue to grab the headlines and momentum away from any potential competing products.

Because of that I believe Apple went to launch with fewer iPad2's than they would have preferred. That forced a move into mass-production a bit sooner than planned. That might not have been any issue tho, as Apple wouldn't be opposed to the appearance of overwhelming sales cleaning out their inventory. If they could quickly ramp up production to 4M unit+ within a month, no harm no foul. But the tsunami event in Japan added another obstacle. Rather than quickly getting up to speed with production, component shortages threw a monkey-wrench into a fast ramp-up. There were components that weren't going to be immediately available to enable millions of iPads to be produced in short order. No amount of money was going to make them available without at least some delay. I won't be shocked if fewer than 2 million iPad2's were actually sold to consumers before the end of the quarter.

With the iPhone, I think Apple was a bit blind-sided with how quickly competitors grabbed market share. I also think Verizon sales will be lighter than many analysts expected. The normally careful and well-planned progression of feature offerings and hardware improvements might not be as effective as in the past. So Apple may be planning a bolder upgrade of iOS, pushing some improvements planned for next year into this fall instead. With component shortages already widely reported, it would make sense if Apple moved the focus to the OS rather than launching new hardware.

And what effect has the iPhone market had on iPod sales. I've had two friends mention that their old iPhone hand-me-downs saved them from purchasing an iPod for the kids. If that's common, iPod sales may be lower than anticipated too.

Note too that Apple has put more emphasis on their Mac line recently, with several models and OS improvements in just a very few months. Then add in the serious upgrades to some of their software products, and needed bug fixes for some of the recent product launches. They're going in a lot of directions all at the same time.

Apple's big, loaded with talent, successful and very profitable. But with so many projects asking for attention, Steve Jobs not able to be as involved as everyone would like, and unanticipated hardware issues beyond their total control it's possible that they may have lost focus in a couple of areas.

It's tough for big companies to pivot. Some of the progression and product plans are in the works for years. When a major event disrupts those plans at the same time that other more minor problems or issues are going on, the challenges can be daunting. If anyone can pull all this off, it would probably be Apple. But I think there might be a combination of issues that are pulling Apple off track in the short term.

A few days from now when all the talking heads chime in about Apple's quarterly results I might find I'm talking out of my ass as Apple posts historic results. But my opinion today is that they might disappoint a few stockholders instead.
melior diabolus quem scies
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post #15 of 16
Quote:
Originally Posted by cvaldes1831 View Post

The numbers look low, particularly earnings per share.

JP Morgan: $24.42B revenue, $5.39 EPS
Apple Finance Board Index: $25.746B revenue, $6.39 EPS

Here are a few individual AFB contributors:
Patrick Smellie: $25.716B revenue, $6.35 EPS
Alexis Cabot: $24.977B revenue, $6.26 EPS
Andy Zaky (also w/Bullish Cross): $24.733B revenue, $6.20 EPS

The Street blew it last quarter. The bloggers were more accurate.

My Wild Arsed Guess: $25.0B revenue, $6.20 EPS. I'm bookmarking this thread, just to see how badly I do.

Actual: $24.67B revenue, $6.40 EPS.
post #16 of 16
Not bad. Better than some that were paid a lot more for their guesses than you were.
melior diabolus quem scies
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