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Earnings preview: Apple expected to deliver $25B quarter on 16.5M iPhones

post #1 of 53
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Trading at record levels ahead of its quarterly earnings report this afternoon, Apple is expected by Wall Street watchers to post its best June quarterly earnings ever, with nearly $25 billion in revenue on sales of 16.5 million iPhones.

A total of 47 analysts polled ahead of today's earnings expect, on average, for Apple to report revenue of $24.92 billion, representing a 58.7 percent year-over-year increase. That number would also be Apple's best non-holiday quarter ever, narrowly edging the $24.67 billion the company sold in this year's March quarter. Market watchers have predicted Apple will post $5.80 earnings per share in its third quarter of fiscal 2011.

On average, analysts expect Apple to report sales of around 16.5 million iPhones, according to StreetAccount data relayed by Piper Jaffray. That would be nearly double the 8.4 million iPhones the company sold in the same quarter a year ago.

Analysts are also calling for Apple to sell a record 4.2 million Macs in the June quarter. That sum would best the 4.1 million Macs Apple sold in the holiday quarter of 2010.

It's also projected to be a record quarter for iPad sales, as Wall Street anticipates the company announcing sales of 7.8 million units of its hot-selling touchscreen tablet. That would be a half-million units more than the previous high of 7.3 million sold in holiday 2010.

Apple tipped its hand on iPad sales in early June, when the company announced at its annual Worldwide Developers Conference that total sales of the device had topped 25 million. At that pace, Apple was on track to sell more than 8 million iPads in the June quarter, though overall analyst predictions are slightly lower.



Finally, the Street sees Apple reporting sales of 8.4 million iPods in the quarter. The company's June gross margins are expected to be around 39 percent.

Looking forward, a total of 44 analysts polled expect Apple's September quarter to see the company reach new heights with $27.7 billion in total revenue, with $6.42 earnings per share. Total revenue for the fiscal year concluding with the September quarter is expected to top $100 billion, with the average prediction at $103.83 billion.

Apple will report its earnings later today after markets close at 4 p.m. Eastern. AppleInsider will have full coverage.
post #2 of 53
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post #3 of 53
The market is up all around, about as much as Apple is, due to the news about housing. I expected Apple to be up more
post #4 of 53
Hoping we'll see $400+ today!
post #5 of 53
What you'll see is a drop after results due to profit taking.
post #6 of 53
6 Hours 40 minutes to go! http://wheniskeynote.com/

See y'all on the flip side, time for bed.

And yeah, take your profits on AAPL if you're in for the short term.

Otherwise, hold on for the ride past $450... by maybe next year.

Or whatever. Cheers and good luck!
post #7 of 53
Quote:
Originally Posted by OriginalG View Post

Hoping we'll see $400+ today!

TODAY? No. Not 30 points in one day. And it'll be back to $330 tomorrow, anyway.

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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post #8 of 53
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Originally Posted by Tallest Skil View Post

TODAY? No. Not 30 points in one day. And it'll be back to $330 tomorrow, anyway.

While it likely wont go to $400 during trading today, it could do so after hours. It certainly won't go down to $330 tomorrow. Apple goes up during the second half of the year, and often drops in January. This is the hot time of the year
post #9 of 53
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Originally Posted by melgross View Post

While it likely wont go to $400 during trading today, it could do so after hours. It certainly won't go down to $330 tomorrow. Apple goes up during the second half of the year, and often drops in January. This is the hot time of the year

But it always rises before keynotes and conference calls and drops immediately after.

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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Originally posted by Relic

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post #10 of 53
Quote:
Originally Posted by Tallest Skil View Post

But it always rises before keynotes and conference calls and drops immediately after.

There is usually an After Hours drop (note they release earnings right when the market closes) but I can't imagine it will be anywhere near 34 points below what it opened at today. I think the average is probably closer to 5 points. However, do to aforementioned shifts affecting the market as a whole I am not predicting any drop in After Hours.
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 #11 of 53
Quote:
Originally Posted by Tallest Skil View Post

But it always rises before keynotes and conference calls and drops immediately after.

Not always. That's a myth. Andy Zaky wrote an interesting article about that a while ago. I wish I had bookmarked it. So Apple may be at 380 at the end of the day, let's say. Depending on where the quarter ends, compared to the rushed out latest higher estimates of the analysts, it could either rise, or fall. It will also depend on where Apples' guidance comes in. I've seen the after hours move either way, depending on that.

If the market gets too exuberant during the day, it could fall a few bucks after hours, as profits are taken. But if Apple out performed in one or more areas, it could run up. The next days opening usually rides upon the after hour trading, and upon how heavy it was.

The point is that it's unpredictable beforehand. If it's 50/50, then you've got a one in two chance of guessing.

I just checked realtime. Apple is up .88%, while the NASDAQ is up 1.57%.
post #12 of 53
Quote:
Originally Posted by Tallest Skil View Post

But it always rises before keynotes and conference calls and drops immediately after.

For 2Q11 (2011 April 20), prior to earnings call, AAPL closed at 330.67 on 2011 April 18. On the next trading day, 21 April 2011, AAPL closed at 339.30, a 2.6% jump UP.
post #13 of 53
Quote:
Originally Posted by melgross View Post

While it likely wont go to $400 during trading today, it could do so after hours. It certainly won't go down to $330 tomorrow. Apple goes up during the second half of the year, and often drops in January. This is the hot time of the year

Yeah, but it's like $500,000,000 per share right now!

Anyways, I can't imagine $330. That would require a drop of nearly $50. I also don't see $400 soon, either.

I do think that $400 is definitely do-able this year, though.
post #14 of 53
Quote:
Originally Posted by Tallest Skil View Post

But it always rises before keynotes and conference calls and drops immediately after.

It doesn't always do anything. And once there is a totally predictable pattern like that, it will do the opposite, as the smart investor will get ahead of what it always does, and sell/buy before it does it.
post #15 of 53
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Originally Posted by nvidia2008 View Post

6 Hours 40 minutes to go! http://wheniskeynote.com/

Nice.
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Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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post #16 of 53
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Originally Posted by AaronJ View Post

Yeah, but it's like $500,000,000 per share right now!

Anyways, I can't imagine $330. That would require a drop of nearly $50. I also don't see $400 soon, either.

I do think that $400 is definitely do-able this year, though.

I've been seeing those crazy numbers on a number of sites beginning a bit over a week ago. Some software is bugging out.

Apple has moved down to about a buck up. But the overall market is still doing well. I wonder if so e late in for has come out, though I can't find anything, or if profit taking has already begun. Of course, some manipulation ahead of the report is also possible.
post #17 of 53
Quote:
Originally Posted by melgross View Post

Not always. That's a myth. Andy Zaky wrote an interesting article about that a while ago. I wish I had bookmarked it. So Apple may be at 380 at the end of the day, let's say. Depending on where the quarter ends, compared to the rushed out latest higher estimates of the analysts, it could either rise, or fall. It will also depend on where Apples' guidance comes in. I've seen the after hours move either way, depending on that.

If the market gets too exuberant during the day, it could fall a few bucks after hours, as profits are taken. But if Apple out performed in one or more areas, it could run up. The next days opening usually rides upon the after hour trading, and upon how heavy it was.

The point is that it's unpredictable beforehand. If it's 50/50, then you've got a one in two chance of guessing.

^ That. ^

The one thing I'll re-emphasize is guidance. No matter whether this past Q's earnings are above or below estimates (unless it's a blow-out), the biggest factor that will affect the price moving forward over the next few days, and potentially even weeks, is guidance. Most people expect Apple's guidance to be very conservative, but if they surprise with significantly lower or higher than expected, that will drive the stock price.

This only makes sense because we're looking at longer-term trajectories, and a small change in "slope" right now can make a huge difference out in the future.
No Matte == No Sale :-(
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No Matte == No Sale :-(
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post #18 of 53
Consensus by the folks who are the leaders in "predictions" actually has Apple at over 26B in revenue, and over 17M in iphones, as well as over 8M ipads (although many have pegged this at almost 10M). Anyhow, it will be a blowout (again), compared to last year, and add about $3.00EPS.

The KEY is what wall street will peg the PE ratio at? If it goes back down to 15 again, Apple will settle down at $360. If it stays near 16PE, it will rise to $384. Who knows what the "new" PE will be, for Wall Street has been ratcheting it down from 22 in the last year. (imagine it at 22 still: $522).
post #19 of 53
Quote:
Originally Posted by OriginalG View Post

Hoping we'll see $400+ today!

While Google jumped 12.5% the day after its earnings call, that is not Apple's mo... so far.

... but I'm getting this hunch that we could see a helluva jump tomorrow... maybe not 10% but a good whack upwards... the iPad numbers have to be really stellar.
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post #20 of 53
Quote:
Originally Posted by melgross View Post

Not always. That's a myth. Andy Zaky wrote an interesting article about that a while ago. I wish I had bookmarked it. So Apple may be at 380 at the end of the day, let's say. Depending on where the quarter ends, compared to the rushed out latest higher estimates of the analysts, it could either rise, or fall. It will also depend on where Apples' guidance comes in. I've seen the after hours move either way, depending on that.

If the market gets too exuberant during the day, it could fall a few bucks after hours, as profits are taken. But if Apple out performed in one or more areas, it could run up. The next days opening usually rides upon the after hour trading, and upon how heavy it was.

The point is that it's unpredictable beforehand. If it's 50/50, then you've got a one in two chance of guessing.

I just checked realtime. Apple is up .88%, while the NASDAQ is up 1.57%.

In my experience (14 years as an AAPL investor), Apple has to beat the street consensus by at least 10% to sustain a rally. Meaning: if reported earnings are not in the neighborhood of $6.50 we are likely to see a selloff after hours and/or tomorrow. Not that any of this momentary stuff should matter too much to investors. The macro story is that AAPL is on a long term trend towards lower multiples, which means that earnings increases probably will not result in proportional increases in shareholder value.

Also worth keeping in mind is AAPL's strong rally in anticipation of this earnings report, over the last couple of weeks. Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more with no blemishes on margins, revenues or guidance. That kind of trifecta is rare, even for Apple.
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post #21 of 53
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Originally Posted by Bagman View Post

Consensus by the folks who are the leaders in "predictions" actually has Apple at over 26B in revenue, and over 17M in iphones, as well as over 8M ipads (although many have pegged this at almost 10M). Anyhow, it will be a blowout (again), compared to last year, and add about $3.00EPS.

The KEY is what wall street will peg the PE ratio at? If it goes back down to 15 again, Apple will settle down at $360. If it stays near 16PE, it will rise to $384. Who knows what the "new" PE will be, for Wall Street has been ratcheting it down from 22 in the last year. (imagine it at 22 still: $522).

The PE compression trend is longer term than that. It's been going on for 3 1/2 years. The reason many investors haven't noticed is that Apple has reported massive earnings increases during this same time span. If the stock was trading today at multiples close to what it was three years ago, AAPL would be, as you say, well north of $500 now.
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post #22 of 53
I couldn't resist taking a little profit today and investing in something more stable. Still have plenty of exposure, but I do think it is possible to see AAPL at $350 next week. I'm having trouble understanding how they could maintain 60% growth much longer; 30% long-term is not a problem in my book, but I can't see the market paying even a 15 P/E for Apple at 30% growth.
post #23 of 53
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Originally Posted by Dr Millmoss View Post

In my experience (14 years as an AAPL investor), Apple has to beat the street consensus by at least 10% to sustain a rally. Meaning: if reported earnings are not in the neighborhood of $6.50 we are likely to see a selloff after hours and/or tomorrow. Not that any of this momentary stuff should matter too much to investors. The macro story is that AAPL is on a long term trend towards lower multiples, which means that earnings increases probably will not result in proportional increases in shareholder value.

Also worth keeping in mind is AAPL's strong rally in anticipation of this earnings report, over the last couple of weeks. Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more with no blemishes on margins, revenues or guidance. That kind of trifecta is rare, even for Apple.

Maybe.
post #24 of 53
Quote:
Originally Posted by aaarrrgggh View Post

I couldn't resist taking a little profit today and investing in something more stable. Still have plenty of exposure, but I do think it is possible to see AAPL at $350 next week. I'm having trouble understanding how they could maintain 60% growth much longer; 30% long-term is not a problem in my book, but I can't see the market paying even a 15 P/E for Apple at 30% growth.

That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.
post #25 of 53
Over the last few years the markets collectively have been questioning how Apple can sustain annual earnings growth rates above 50%, but the company has managed it just the same. You can argue all you like with market psychology but you will rarely win that argument.
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post #26 of 53
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Originally Posted by melgross View Post

Maybe.

Um, maybe what? (I did cover some ground in that post.)

Quote:
Originally Posted by melgross View Post

That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.

If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.
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post #27 of 53
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Originally Posted by melgross View Post

I've been seeing those crazy numbers on a number of sites beginning a bit over a week ago. Some software is bugging out.

Heh. Yeah, who knows what's going on?

Quote:
Apple has moved down to about a buck up. But the overall market is still doing well. I wonder if so e late in for has come out, though I can't find anything, or if profit taking has already begun. Of course, some manipulation ahead of the report is also possible.

I tend to see Apple move in ways, in the short term, opposite of what one might think. I don't pretend to know what the hell I'm talking about, though.

The report is probably going to be fantastic, then the price will drop as people do ... something.

I'm in it for the long haul, though. So little bumps and drops never really concern me that much, since it seems to go up and up, over the long run.
post #28 of 53
Quote:
Originally Posted by melgross View Post

The market is up all around, about as much as Apple is, due to the news about housing. I expected Apple to be up more

Well we saw goog jump a lot on a little bit of good news and apple may just jump also.
Appl is up a bunch this last 9 days .

so we may see appl streaking up on great news past 400 !!!!

or sell down to 342 on great news ,


yea yea
take
,,,,,,take a
a walk on the wild side

and the colored girls go ... ,,, ,, , , ,
whats in a name ? 
beatles
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whats in a name ? 
beatles
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post #29 of 53
Quote:
Originally Posted by Dr Millmoss View Post

Um, maybe what? (I did cover some ground in that post.)

As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.

Quote:
If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.

in Apples' case, no doubt.

MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.
post #30 of 53
Quote:
Originally Posted by brucep View Post

Well we saw goog jump a lot on a little bit of good news and apple may just jump also.
Appl is up a bunch this last 9 days .

so we may see appl streaking up on great news past 400 !!!!

or sell down to 342 on great news ,


yea yea
take
,,,,,,take a
a walk on the wild side

and the colored girls go ... ,,, ,, , , ,

I'd love to know what you're on, Bruce.
post #31 of 53
Quote:
Originally Posted by melgross View Post

As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.

As have I. It's a rule-of-thumb, not a law. But if I were a betting man, that's how I'd wager. We shall see for this quarter soon enough!

Quote:
in Apples' case, no doubt.

MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.

I'm not predicting that AAPL will become MSFT any time soon, but the trend is already in that direction and would only accelerate if Apple started posting earnings gains closer to 25%.

So how about that dividend?
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post #32 of 53
My estimate (I think is a tad conservative).

Category Units ASP Revenue
Mac 4.05 1290\t 5228
iPod 8.5\t 175\t 1488
iPhone 18\t 650\t 11700
iPad 7.5\t 600\t 4500
iTunes\tNA\t NA\t 1850
Others\tNA\t NA\t \t1350
TOTAL: 26116

EPS $6.82
post #33 of 53
Quote:
Originally Posted by Dr Millmoss View Post


So how about that dividend?

I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.

They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.
post #34 of 53
Quote:
Originally Posted by melgross View Post

I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.

They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.

I've never expected a dividend that can't easily be paid out of cash flow. I suspect the objection on the part of the board to paying even a modest dividend is more religious than practical. They always avoid answering that question at stockholder's meeting, so that's nothing new.
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post #35 of 53
EPS $7.79. Can that be right?
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post #36 of 53
Quote:
Originally Posted by Dr Millmoss View Post

EPS $7.79. Can that be right?

Crazy man... crazy!! [on edit: 7.79 does sound high]

20.34 million iPhones! 9.25 million iPads!!

Yowzer!!
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post #37 of 53
Whoa! The numbers are off the wall! $11.1 billion cash flow.
post #38 of 53
Quote:
Originally Posted by Dr Millmoss View Post

EPS $7.79. Can that be right?


"Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more..."
post #39 of 53
Quote:
Originally Posted by Dr Millmoss View Post

EPS $7.79. Can that be right?

The numbers are crazy. Missed a bit on Macs and iPods, but everything else is in orbit.
post #40 of 53
Quote:
Originally Posted by OriginalG View Post

Hoping we'll see $400+ today!

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