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Earnings preview: Apple expected to report record iPad sales, first shrinking profit in a decade

post #1 of 47
Thread Starter 
Expectations are low for Apple's recently concluded March quarter, in which some market watchers believe the company likely saw its first year-over-year profit decline in a decade, despite booming sales of its iPad lineup.

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On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07. In comparison, a year ago the company made $12.30 earnings per share on sales of $39.19 billion.Record iPad sales are expected, while the iPhone may also reach new March quarter highs. But investors also expect Apple's profits to shrink year over year for the first time in a decade.

The last time Apple saw a year over year decline in profit was in 2003. The company will report its March quarter results after the markets close on Tuesday, followed by a conference call scheduled for 5 p.m. Eastern.

Sales of the iPhone are expected by Wall Street to be about flat from last year, but they could still set a new record. A year ago, Apple sold 35.1 million iPhones, its best-ever number for a March quarter. This year the market has a consensus expectation of 36.4 million units, which would be a new March quarter record, according to Chris Whitmore of Deutsche Bank.

Shaw Wu of Sterne Agee is less optimistic, as he believes market consensus is at 34 million iPhones ? a number that would instead represent a year over year decline. Wu himself is forecasting for Apple to have sold just 32.5 million iPhones.

However, Apple's other key product lineup, the iPad, is expected by investors to break records for the March quarter. Consensus calls for Apple to have sold between 18 and 19 million iPads, according to Wu, which would be a significant increase from the 11.8 million Apple sold a year ago.

As for the Mac, Wu said market consensus is calling for 3.8 million to 3.9 million units. Apple's March fiscal 2012 quarter saw sales of 4 million Macs.

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Tuesday's earnings report will be of particular interest to investors because it will be the first time the company discloses its sales under its new, more realistic guidance strategy. After giving the market overly conservative guidance for years, the company announced in January that it it had overhauled how it would forecast upcoming quarters.Tuesday's earnings will mark the first reported by Apple under its new, more "realistic" guidance.

The changes were made in an effort to thwart what had become excessively enthusiastic analyst expectations. Apple's previous guidance reflected numbers the company felt it had a reasonable chance to exceed, while the new guidance instead reflects what company officials believe Apple is likely to achieve.

Back in January, Apple guided sales of between $41 billion and $43 billion for the March quarter.

Apple's guidance for the following June quarter could also be telling. The company has yet to launch a major product in 2013, and many investors are eagerly awaiting the company's next moves, with some speculation that a new fifth-generation iPad could launch in the near future.

Speculation has also suggested that Apple will launch its next handset, a so-called "iPhone 5S," earlier than in the past few years. Some reports have pegged an "iPhone 5S" launch for July, which would be less than a year after the September 2012 debut of the iPhone 5.

Finally, there's also the question of how much potential bad news is already "baked in" to Apple's stock price. Some believe if Apple's March quarter earnings miss estimates, investors won't be surprised and the stock may not take much of a hit.

The company's stock price first dipped under $400 last week after a key component supplier reported weak results for the March quarter. Shares of AAPL have tumbled more than $300 from their highs seen last September, ahead of the iPhone 5 launch.
post #2 of 47
So ... Apple will perform at the upper end of their own forecasted range, while analysts have been touting all kinds of rubbish to manipulate the stock. Maybe investors will learn to simply follow Apple's guidance from now on ...
post #3 of 47

I really like how profits are shrinking but the stock is going up... 

 

 

Quote:
The reason why they are analysts is because they failed at running businesses.

 

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Quote:
The reason why they are analysts is because they failed at running businesses.

 

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post #4 of 47
Quote:
Originally Posted by emig647 View Post

I really like how profits are shrinking but the stock is going up... 

You took the words right out of my mouth.

I wouldn't be surprised if there is a run on the stock in the days preceding the next iPhone.
post #5 of 47
Quote:
Originally Posted by MattBookAir View Post

So ... Apple will perform at the upper end of their own forecasted range, while analysts have been touting all kinds of rubbish to manipulate the stock. Maybe investors will learn to simply follow Apple's guidance from now on ...


We'll have to wait until tomorrow to find out.

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post #6 of 47
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Originally Posted by AppleInsider View Post

...

Stock

 

Why not post a graph showing income vs profit over the last number of years instead of stock price.  Gives the illusion they are loosing money while in reality, they keep making piles of profit...

post #7 of 47
Quote:
Originally Posted by emig647 View Post

I really like how profits are shrinking but the stock is going up... 


Everyone is guessing at this point but there is talk of an upside surprise.

 

Regardless... $400 seems to be resistance for today... could be nothing more than psychological.

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post #8 of 47
first shrinking profit in a decade

I heard the same in last quarter result . But it turned out AAPL still drops even it was not true . Now the mother fuxkers say this Again ? Wtf .
post #9 of 47
In the past several years, Apple had the spring release of an iPad to help expectations stay high. Unfortunately, this year there does not seem to be any consensus as to when next gen iPads are due and logic says the fall refresh was implemented to plan for a longer than usual winter. With the unexpectedly great year ago quarter to compare to, I think the stock is going to tumble some more unless Apple beats the upper end of its guidance.
The businesses they have continue to do well with two cautions: 1) the iPhone does not compete well in the prepaid market. I think, even in the US, the prepaid market is the future. 2) Apple does not compete in the larger screen phone arena at all. If you believe the forecasts for increased iPad sales, that comes largely from offering more than one size of device. What if Apple stopped insisting (wrongly) that one size iPhone is best for all?
post #10 of 47

I have never seen so much pessimism about a company right before earnings.  Having sold all my AAPL higher, I bought some back today.  Will buy more tomorrow.  I expect $500 at least very soon.  Gotta have faith in Tim Cook and other managers.  They are the best in the business.  Wall Street is stupid.

post #11 of 47

Has there ever been a more undervalued big cap stock than AAPL in the history of the stock market?

 

AAPL's current price is a total joke, and Apple continues to lead the way in profits and has the best customer satisfaction in the entire industry. 

 

Apple owns the entire tablet category. The iPad is so dominant that everybody else is just fighting for crumbs, which is not really that surprising, since the iPad is the only true original, and everybody else just makes inferior copies. The iPad is also a big reason why traditional PC sales are declining.

 

Apple's OS X desktop and laptop machines continue to do extremely well VS. the rest of the PC industry. They are the gold standard and nothing else comes close.

 

The iPhone 5 is the top selling phone in the US and Apple hold three positions out of five on the top five chart. iPhones continue to remain in extreme demand, and the most recent iPhone launch on T-Mobile was "Gangbusters", according to the CEO of T-Mobile.

 

AAPL should be at around $1000 now, IMO.

 

And it's also time to start investigating illegal activity by known criminal entities such as Samsung, which is intentionally attempting to manipulate the price of shares of Apple, by repeatedly planting false stories in the media (Hello Digitimes!), that is reprinted by other sites, including this site, AI. That is my theory.

post #12 of 47
Problem is Apple has set the bar so high even above average performance is considered a loss by many. Until Apple comes out with a whole new (not the mini which is a redesign of existing) and highly successful product line post SJ era, analysts and similar will be reticent on the company.
post #13 of 47
Quote:
Originally Posted by drwam View Post

With the unexpectedly great year ago quarter to compare to, I think the stock is going to tumble some more unless Apple beats the upper end of its guidance.

 

Do you see the problem that occurs if "Apple beats the upper end of its guidance"?

post #14 of 47
Wall Street loves companies overleveraged. Gives all those clowns the shakes because Apple has no problems like this, thus they are difficult to pin down. All they can do to control AAPL is float lies and misinformation through back channels (analysts) to influence the stock by inciting panic or greed in clueless investors.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
post #15 of 47
Quote:
Originally Posted by AppleGreen View Post

I have never seen so much pessimism about a company right before earnings.  Having sold all my AAPL higher, I bought some back today.  Will buy more tomorrow.  I expect $500 at least very soon.  Gotta have faith in Tim Cook and other managers.  They are the best in the business.  Wall Street is stupid.

 

The trouble is that 'investors' are stuck with the AAPL motto of 'buy on rumor, sell on news,' so this won't end soon.  AAPL stock is stuck in a feedback loop, fueled by 'analysts.'

post #16 of 47
Are we talking about shrinking profit or a shrinking profit increase?
post #17 of 47

Question:

 

What if their profit absolutely falls of a cliff (50%) and they only make as much money as Samsung while all others lose?

Will the world end?

Will 150 billion be enough for another week or 2?

Will my mac shut down?

 

What if it goes down 80% and they only make as much money as google?

Will the stock double?

Will the press pray the gods for the existence of Apple?

Will black holes throw some beer to us?

Will god send a tweet?

 

What if they only make 1 dollar net profit each year (after dividends, investments, etc) until 2020?

Will things change? Will they go bankrupt?

 

No?

 

Why the hell are people worried or even losing time about it?

What about discussing products, change ideas to make our experience better, share tips, etc?

 

Thank you. 

post #18 of 47

Tomorrow is the day to buy big on AAPL.

post #19 of 47
Quote:
Originally Posted by brutus009 View Post

Tomorrow is the day to buy big on AAPL.

Haha.

 

Maybe, maybe not.

 

It's anybody's guess as to which way the market will react. It is made up of irrational lunatics who make their decisions based on a herd mentality. Could go up. Could go down, as we've seen in recent earnings.

post #20 of 47
Quote:
Originally Posted by crazy_mac_lover View Post

first shrinking profit in a decade

I heard the same in last quarter result . But it turned out AAPL still drops even it was not true . Now the mother fuxkers say this Again ? Wtf .

Shrinking profit or shrinking profit per share with more shares in the market?

 

Not that the news will pay attention to that difference if it's the case: they sure ignored  the difference in the size of the quarters to boost the "lower" meme they were touting.

post #21 of 47
Quote:
Originally Posted by pedromartins View Post

Why the hell are people worried or even losing time about it?

What about discussing products, change ideas to make our experience better, share tips, etc?

 

Thank you. 

 

This is just a wild guess, but people who invest their money in the company might be slightly interested in this topic.

 

As for new products, I'm not really that interested in reading any more about rumors of new phones for people who can barely afford a pair of shoes. I'll talk about new products, when the next exciting product comes along that is actually worth talking about.

post #22 of 47
"Apple only cares about profit!! They don't care about consumers! OMG look at how much money they're making!"

Apple reports lower profit.

"AHAHAH OMG Apple is doomed!"

O.o
post #23 of 47
Quote:
Originally Posted by Apple ][ View Post

 

This is just a wild guess, but people who invest their money in the company might be slightly interested in this topic.

 

As for new products, I'm not really that interested in reading any more about rumors of new phones for people who can barely afford a pair of shoes. I'll talk about new products, when the next exciting product comes along that is actually worth talking about.

Actually, that's the problem.

 

They invested the money on a company they know nothing about, and are demanding things, damaging the brand and themselves.

Fortunately, Apple is too strong to be influenced by APPL and everything that comes with it: problematic stuff, fools.

post #24 of 47

Eitherway this is a buy

 

If profits miss it will drop at least 20 to 30 over the rest of week, which will provide a great entry point to  DCA on the way down. If it bust out it will go to next resistance level of about 470  in which case can ride a medium term position. The only secnario which sucks is whisper number.

post #25 of 47
Quote:
Originally Posted by Quadra 610 View Post

"Apple only cares about profit!! They don't care about consumers! OMG look at how much money they're making!"

Apple reports lower profit.

"AHAHAH OMG Apple is doomed!"

O.o

 

Exactly. The trolls constantly hammer away at the "Apple tax" talking point. Apple is greedy, Apple screws its customers, Apple is overpriced. So record sales may be reported tomorrow but with reduced profits caused by competition, higher production costs, lower margins ,etc. Bottom line, if true, is that the "Apple tax" will have been lowered. What will the troll response be? Do I even have to ask this question? "Apple profit plunges, the company is doomed!"

 

Point is no matter how good or mixed tomorrow's financial results are there will be massive negative spin applied. And because of the negative spin any positive talk or defense by Apple executives will, in turn, be "interpreted" as weakness and fear.

 

The only good thing I'm starting to read around financial web sites is that people are beginning to question why the stock has been hammered so brutally in the face of the basic strength of fundamentals, sales, profit, cash position, and lack of debt of Apple. If AAPL were to dive to $200 it would represent a market cap of approximately equal to its cash and physical assets. Is that even a rational thought?  Yet the trolls like to predict it.

post #26 of 47
Quote:
Originally Posted by drwam View Post

In the past several years, Apple had the spring release of an iPad to help expectations stay high.

And Apple, knowing there would be no iPad etc released during the quarter, gave appropriate guidance. Not that the analysts etc ever listen. They will just look at last year when there was such a release and bad mouth the results even if they are awesome because they 'should have been' better. Same as the folks not paying attention to the fact that last quarter was holiday so of course sales this quarter will be lower. It's the nature of the whole post holiday time period.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #27 of 47

If you're focused on the longer horizon -- say, 2 to 5 years -- this is all piddling short-term noise, folks. Pay no attention.

 

I recall in late 2006 -- around the time I joined these boards -- when there were invective-filled debates here at AI around whether Apple had topped out at $85. Some were confident that Apple could go as high as the $120s(!), and were laughed at.

 

Then, in Jan 2007, the iPhone showed up...... 1smile.gif

 

Patience.

post #28 of 47
To avoid a drop Apple need to beat the whisper number, which is at 10.55
post #29 of 47
Quote:
Originally Posted by AppleGreen View Post

I have never seen so much pessimism about a company right before earnings.  Having sold all my AAPL higher, I bought some back today.  Will buy more tomorrow.  I expect $500 at least very soon.  Gotta have faith in Tim Cook and other managers.  They are the best in the business.  Wall Street is stupid.

If you really bought the stock and not options its a good move. Volatility is very high right now so options premiums are huge. Options price are going down after earning regardless of stock direction, unless the move is big, both sides will lose.
post #30 of 47
Quote:
Originally Posted by lkrupp View Post

 

Exactly. The trolls constantly hammer away at the "Apple tax" talking point. Apple is greedy, Apple screws its customers, Apple is overpriced. So record sales may be reported tomorrow but with reduced profits caused by competition, higher production costs, lower margins ,etc. Bottom line, if true, is that the "Apple tax" will have been lowered. What will the troll response be? Do I even have to ask this question? "Apple profit plunges, the company is doomed!"

 

Point is no matter how good or mixed tomorrow's financial results are there will be massive negative spin applied. And because of the negative spin any positive talk or defense by Apple executives will, in turn, be "interpreted" as weakness and fear.

 

The only good thing I'm starting to read around financial web sites is that people are beginning to question why the stock has been hammered so brutally in the face of the basic strength of fundamentals, sales, profit, cash position, and lack of debt of Apple. If AAPL were to dive to $200 it would represent a market cap of approximately equal to its cash and physical assets. Is that even a rational thought?  Yet the trolls like to predict it.

Hence their label as "trolls".

post #31 of 47
Quote:
Originally Posted by anantksundaram View Post

If you're focused on the longer horizon -- say, 2 to 5 years -- this is all piddling short-term noise, folks. Pay no attention.

 

I recall in late 2006 -- around the time I joined these boards -- when there were invective-filled debates here at AI around whether Apple had topped out at $85. Some were confident that Apple could go as high as the $120s(!), and were laughed at.

 

Then, in Jan 2007, the iPhone showed up...... 1smile.gif

 

Patience.

 

Right.  But Apple is running out of product spaces that it can innovate in and still make boatlods of dough.

 

iTV?  Sure, a nice new business.  But it won't make the stock move that much unless Apple has a revolutionary way to bundle service.  And a TV is something people replace every 5-10 years, not every 2 years with a subsidy from the telco.

 

iWatch?  I could see how this could be the next iPod in a sense.  But the problem here is that iWatch sales would be entirely limited to iPhone/iTouch owners.  Profitable? Sure.  A major line of business for Apple? Doubt it.

 

Now you can see why investors are cautious.  For every argument on why Apple should shoot up, there's plenty of reason to be cautious. 

post #32 of 47
Quote:
Originally Posted by Jetz View Post

Right.  But Apple is running out of product spaces that it can innovate in and still make boatlods of dough.

 

iTV?  Sure, a nice new business.  But it won't make the stock move that much unless Apple has a revolutionary way to bundle service.  And a TV is something people replace every 5-10 years, not every 2 years with a subsidy from the telco.

 

iWatch?  I could see how this could be the next iPod in a sense.  But the problem here is that iWatch sales would be entirely limited to iPhone/iTouch owners.  Profitable? Sure.  A major line of business for Apple? Doubt it.

 

Now you can see why investors are cautious.  For every argument on why Apple should shoot up, there's plenty of reason to be cautious. 

That's because you're probably not seeing beyond some cutesy nonsense that's regularly trotted out.

 

Think iChinaMobile, iIndia, iHealth, iEducation, iCar, iEnterprise. Just for starters.

post #33 of 47
No surprise that profits will fall in these days of such intense competition. Apple's success has created the competition, which must compensate for lesser quality products with aggressive pricing. It's natural that the market leader will have to sacrifice a little profitability. But AAPL is still a long way from being in the red!
post #34 of 47
Quote:
Originally Posted by Apple ][ View Post

Apple owns the entire tablet category.

"IPad shipments are expected to account for 46 percent of the tablet market in 2013, down from 51 percent last year, the research company (IDC) said. The market share for devices running Android is expected to grow to 49 percent this year from 42 percent last year."

source: http://www.nytimes.com/2013/03/14/technology/14iht-android14.html
post #35 of 47
Quote:
Originally Posted by Sensi View Post

"IPad shipments are expected to account for 46 percent of the tablet market in 2013, down from 51 percent last year, the research company (IDC) said. The market share for devices running Android is expected to grow to 49 percent this year from 42 percent last year."

source: http://www.nytimes.com/2013/03/14/technology/14iht-android14.html

1) Quoting estimates, especially future estimates, aren't fact. For example, in 2013 80% of the population will realize that analysts are worth less than palm readers. I declare it is writ therefore tis true¡

2) Do you see 1 non-Apple tablet for every Apple tablet? I certainly don't. I do see a lot of Macs in consumer's hands so maybe all these tablets are being used by executives*.




* Almost couldn't finish writing that sentence without laughing out loud over what a silly comment it is.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #36 of 47
I hate to be the bearer of bad news but this baby is going down to at least $320 before we see a recovery. Even if they come out with a report in line with guidance, people will sell on the news. The price of AAPL has nothing to do with fundamentals so you can throw your P/E calculations out the window. If AAPL was trading at the same P/E ratio as GOOG, it would be at $1055. Get out now while you can or wait for a bottom before you buy. 1hmm.gif
post #37 of 47
Fcuk you, Shaw Wu.
post #38 of 47
Quote:
Originally Posted by KDMeister View Post

I hate to be the bearer of bad news but this baby is going down to at least $320 before we see a recovery. Even if they come out with a report in line with guidance, people will sell on the news. The price of AAPL has nothing to do with fundamentals so you can throw your P/E calculations out the window. If AAPL was trading at the same P/E ratio as GOOG, it would be at $1055. Get out now while you can or wait for a bottom before you buy. 1hmm.gif

 

So you're saying the price has nothing to do with fundamentals and it has nothing to do with P/E ratio.  It has already come down from >$700.  What reasoning do you provide for saying it will further drop to $320 or are you just pulling that number out of your ass?

post #39 of 47
Quote:
Originally Posted by techguy911 View Post

It has already come down from >$700.  What reasoning do you provide for saying it will further drop to $320 or are you just pulling that number out of your ass?

If you compare Apple with Exxon, which is a company that earns more profit per year than Apple (although Apple has beat it in some quarters and has more cash) you can see that its market cap is $396b. Apple's market cap is currently around $380b. For Apple to be worth more than Exxon, it would have to show that it is capable of being a more profitable company than Exxon going forward and that will be indicated by profit growth compared to last year.

Estimates of $1000 are a bit crazy. Why would investors possibly value Apple at more than double a company that makes more profit per year than them? I'd say that $500 is a realistic valuation but that still requires indications of growth, which doesn't look likely. I think sales will still be strong so there's little reason to go down to $320 but it's still possible.

Keep in mind what $320 represents. That still only gives them the second highest market cap in the world behind Exxon.
post #40 of 47
Quote:
Originally Posted by echosonic View Post

Fcuk you, Shaw Wu.


He may be tagging along on the anti-TC campaign, but he'll only look stupid if wrong.

 

Here in the UK I don't see that many people with an iPhone 5. The monthly price plans from the carriers are cheaper than they used to be for the 4 and 4S. Which either indicates competitive pressure or a wish/need to offload more 5s. I don't know if that's the same elsewhere, but a breakdown of sales by country could make interesting reading - perhaps some markets are less impressed by the 5.

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