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iPhone metrics to be focus of Apple quarterly call

post #1 of 25
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While robust Mac sales are likely to drive Apple to yet another solid quarter, it will be discussion of iPhone metrics that dominate the firm's fiscal third quarter conference call next week, according to Piper Jaffray.

"We expect Apple will be slightly ahead of Street consensus when it reports next week," analyst Gene Munster wrote in a report Monday. "Outperformance will likely be driven by Mac units and, to a lesser extent, initial iPhone sales."

Munster said iPhone revenue will not be material to the company's third quarter earnings, as the handset went on sale with only two days left in the quarter. Even if Apple managed to sell half a million units in that time, it would only account for an additional $12 million in immediately recognizable revenue due to the company's plan to defer its iPhone accounting over a 24 month period, he explained.

Still, the analyst expects the focus of the company's quarterly call to be weighted heavily towards discussion of the handset's metrics. Like it does with Macs and iPods, Apple will be breaking out iPhone sales into a distinct data category. This means it will report precisely how many iPhone units it sells each quarter, beginning with the first two days of sales at the end of its third fiscal quarter ended June 30th.

Although Munster's original model calls for Apple to have shipped about 200,000 units during the quarter's end, he believes the company may have sold as many as 500,000 iPhones during the first weekend, which would be well ahead of the Street's 330,000 consensus estimate.

"The key metrics of focus on the call will be iPhone units and iPhone inventory levels," he wrote.

In regards to Apple's other business segments, the Piper Jaffray analyst said he's looking for iPod unit sales in the 9.5 to 10.0 million range, and Macs in the 1.6+ million range.

"We expect slight upside to Mac units in the June quarter, based particularly on continued strength in portables, as Apple updated both the Macbook and Macbook Pro during the quarter," he told clients.

The analyst, who maintains an Outperform rating and $160 price target on Apple shares, also believes the company will use its July 25th conference call to once again guide conservatively for its current fourth fiscal quarter of the year.
post #2 of 25
Quote:
Originally Posted by AppleInsider View Post

Even if Apple managed to sell half a million units in that time, it would only account for an additional $12 million in revenue, he explained.


Is the word revenue confusing me or is my math off?

$600* x 500,000 = $300,000,000




* I'm using $600 because apparently 85% were the 8GB iPhones and there were plenty of accessories sold too.
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post #3 of 25
Quote:
Originally Posted by solipsism View Post

Is the word revenue confusing me or is my math off?

$600* x 500,000 = $300,000,000

Good question. I was wondering that too.

My thought was that it was because of the way they said that they were going to account for iPhone sales, spreading the revenue out over a time period to allow them to add unannounced features without incurring McCain/Feingold wrath. If that were the case, they would only be able to see/report a fraction of the actual sale price in the first two days even though the rest of the $$$ is already there.

That is just a guess, of course. But it would account for the discrepancy.
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post #4 of 25
Quote:
Originally Posted by solipsism View Post

Is the word revenue confusing me or is my math off?

$600* x 500,000 = $300,000,000




* I'm using $600 because apparently 85% were the 8GB iPhones and there were plenty of accessories sold too.

divide by the 24 months that Apple will pro-rate the revenue over.

$580 x 500,00 / 24 = $12.1M
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post #5 of 25
Quote:
Originally Posted by jwdawso View Post

divide by the 24 months that Apple will pro-rate the revenue over.

$580 x 500,00 / 24 = $12.1M

Good show. Thanks.
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post #6 of 25
Quote:
Originally Posted by Bageljoey View Post

Good question. I was wondering that too.

My thought was that it was because of the way they said that they were going to account for iPhone sales, spreading the revenue out over a time period to allow them to add unannounced features without incurring McCain/Feingold wrath. If that were the case, they would only be able to see/report a fraction of the actual sale price in the first two days even though the rest of the $$$ is already there.

That is just a guess, of course. But it would account for the discrepancy.

You probably Sarbanes-Oxley. McCain Feingold is political campaign reform.

Disappointed in Mr. Munster implication that Mac sales will grow 25% when the average for the past 4 quarters was 27%, in spite of anecdotal evidence of blooming sales from NPD data.
post #7 of 25
So is Apples computer business irrelevant now then?
post #8 of 25
Quote:
Originally Posted by xflare View Post

So is Apples computer business irrelevant now then?

As irrelevant as 65% of your revenues (pre iPhone launch) can be. I guess with iPod this and iPhone that, the Macintosh linchpin gets stuck in the background because computer sales isn't glamorous anymore.
post #9 of 25
Quote:
Originally Posted by xflare View Post

So is Apples computer business irrelevant now then?

No, but it's only part of a larger picture now. It helps defray the cost for operating system development, keeps people writing drivers for the systems, etc. It's true without a low or mid-range tower they don't seem to be taking it very seriously, but it's still important to the company.
post #10 of 25
Quote:
Originally Posted by Booga View Post

It's true without a low or mid-range tower they don't seem to be taking it very seriously, but it's still important to the company.


Well maybe Apple actually DOES know their market demographics and a low or mid-range tower is not essential to their Mac business.. I mean, they are selling over 2x the amount of Macs per quarter than they were just 2-3 years ago.
post #11 of 25
Quote:
Originally Posted by Booga View Post

No, but it's only part of a larger picture now. It helps defray the cost for operating system development, keeps people writing drivers for the systems, etc. It's true without a low or mid-range tower they don't seem to be taking it very seriously, but it's still important to the company.

Why do you say that? Apple has not been prepared to take on the whole world's Enterprise. Look at what happens when you do--- Dell, has margins that are so thin that they are in a sort of hell hole. Given the huge shot in the arm today for Apple with Auto Warehousing Co switching to the Mac platform, Apple will likely address Enterprise needs more fully, IF more traction like this happens. But the last thing any of us shareholders and Apple supporters wants is for it to become a behemoth turning out commodity crap-- and so far, no one has been able to figure out how to make Rolls-Royces, Lamborghinis, Aston-Martins, etc for 10,000 bucks and sell them in the millions.

I don't think Apple has NOT taken this seriously but had it been a company like Dell, there would be no OSX, no iPod, no iPhone and no stunning computer design. But not competitive? Indeed, comparing similar high end models with Dell these days, Apple is cheaper-- and forget the OS and other software that Apple has available, in addition.

Perhaps, it is time to bring out the dumb terminal concept for Apple to place on bank clerks' desktops, eg, unless a cheaper (not cheaply designed or made) iMac can be made to fill the role of the ubiquitous scungey desk-tops you see by the legion in offices everywhere. Perhaps, a new version of the Mac mini so that the hardware costs are minimal. Or a corporate specific version of OSX-- harder to police, though.
If Apple changes to a high volume manufacturer therein lies great peril, for both Apple and its supporting base. In any case, I never worry about this, as Apple is an incredible success, even if it stays the way it is-- but it won't! Nothing is static-- you either go up or down-- there is no roosting on your glory. Steve and Co. are as shrewd as any business people have ever been-- they are up there with Edison, Ford etc. and will clearly meet the needs of the consumer, when and IF they can manage to do so while maintaining the class act they are!

Microsoft is a good example of a declining company--- it is painfully slow, but it is suffering from senility and it's current form does not allow it to recover. Look what happened to Longhorn-- basically scrapped in an 11th hour scramble to market. Vista arrived minus virtually all the promised improvements... XP was prettied up and that was just about it. This is so contrary to what Apple is doing.
post #12 of 25
Quote:
Originally Posted by rjwill246 View Post

Why do you say that? Apple has not been prepared to take on the whole world's Enterprise. Look at what happens when you do--- Dell, has margins that are so thin that they are in a sort of hell hole....

You are wasting your breath. There are too many people on these forums who believe what meets their needs must meet Apple's needs. No amount of logic will convince them otherwise.
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post #13 of 25
Quote:
Originally Posted by solipsism View Post

You are wasting your breath. There are too many people on these forums who believe what meets their needs must meet Apple's needs. No amount of logic will convince them otherwise.


You're right!
post #14 of 25
Quote:
Originally Posted by rjwill246 View Post

how to make Rolls-Royces, Lamborghinis, Aston-Martins, etc for 10,000 bucks and sell them in the millions.


Apple is Audi and Microsoft is the belated 1970's Ford Pinto that explodes to rear impact
post #15 of 25
Quote:
Originally Posted by jwdawso View Post

divide by the 24 months that Apple will pro-rate the revenue over.

$580 x 500,00 / 24 = $12.1M

I think the real calculation is $600 x 0.5M / 8Q * 41% profit margin = $15M. That is $0.015/share. Not bad for two days...
post #16 of 25
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Originally Posted by Obelix View Post

You probably Sarbanes-Oxley. McCain Feingold is political campaign reform.

You're right. Other than that I guess I got it.
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post #17 of 25
I am so tired of every single thread, no matter the topic, turned into a bunch of people saying that apple "NEEDS" a "headless" tower, a "mid-level" tower, or otherwise noting a "gaping hole" in their offerings. I mean please, look at the real world.

future: LAPTOPS, IPHONE, IPOD, some all-in-ones (IMAC), and a tiny number of workhorses.

The tower model is dead except for the VERY VERY VERY VERY small percentage of computer users who need a powerful machine, which Apple also offers. For the VAST majority of users, laptops are the future. A home computer for the family. BS. Everyone gets their own laptop. That is the direction we've been heading for years. In 10 years, 90+% of all computers sold will be laptops.

the headless idea is stupid. a mid-tower or whatever the hell is even stupider.

Thank God none of you work at Apple. I'd sell my stock immediately.
post #18 of 25
Quote:
Originally Posted by aaarrrgggh View Post

I think the real calculation is $600 x 0.5M / 8Q * 41% profit margin = $15M. That is $0.015/share. Not bad for two days...

That would be earnings, not revenue.

Quote:
Originally Posted by rjwill246 View Post

Perhaps, it is time to bring out the dumb terminal concept for Apple to place on bank clerks' desktops,

I would love it if they did this, you could have a single mac pro and dumb terminals for all the family computers. The terminals could look like iBooks or iMacs, but with less stuff inside.
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post #19 of 25
I'm glad Jobs has Apple focused on laptops and Post-PC devices like iPhones rather than headless mid-tower desktop Macs. The current highly profitable Mac lineup is selling to enough people to keep Mac sales growing to spur third party software development. And OS X development costs are being covered not only by Mac sales but by iPhone, AppleTV, and iPod sales.

What I'd like to see is a mobile Mac that fits in between the MacBook and the iPhone. I don't know exactly what that is but I sure hope Jobs does.
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post #20 of 25
Quote:
Originally Posted by aaarrrgggh View Post

I think the real calculation is $600 x 0.5M / 8Q * 41% profit margin = $15M. That is $0.015/share. Not bad for two days...

Where do you get your profit margin from? Hopefully not from an assumed cost of the parts. Also, that calculation doesn't account for the monthly revenue received from AT&Tfor each iPhone user.
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post #21 of 25
Quote:
Originally Posted by mgoodman View Post

I am so tired of every single thread, no matter the topic, turned into a bunch of people saying that apple "NEEDS" a "headless" tower, a "mid-level" tower, or otherwise noting a "gaping hole" in their offerings. I mean please, look at the real world.

the headless idea is stupid. a mid-tower or whatever the hell is even stupider.

Post of the Week!

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Originally Posted by mgoodman View Post

Thank God none of you work at Apple. I'd sell my stock immediately.

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post #22 of 25
Quote:
Originally Posted by mgoodman View Post

I am so tired of every single thread, no matter the topic, turned into a bunch of people saying that apple "NEEDS" a "headless" tower, a "mid-level" tower, or otherwise noting a "gaping hole" in their offerings. I mean please, look at the real world.

future: LAPTOPS, IPHONE, IPOD, some all-in-ones (IMAC), and a tiny number of workhorses.

The tower model is dead except for the VERY VERY VERY VERY small percentage of computer users who need a powerful machine, which Apple also offers. For the VAST majority of users, laptops are the future. A home computer for the family. BS. Everyone gets their own laptop. That is the direction we've been heading for years. In 10 years, 90+% of all computers sold will be laptops.

the headless idea is stupid. a mid-tower or whatever the hell is even stupider.

Thank God none of you work at Apple. I'd sell my stock immediately.

Excellent post!! Still I'd like to see some sort of home media server produced by Apple. One that could host your iTunes library and Pictures, but has enough capacity. 500GB-1TB should be enough for now. Server could also host your Time machine backups and things like that. Basically it would be a NAS device, but with some added logic. I.E. apache server would be nice.
post #23 of 25
Quote:
Originally Posted by e1618978 View Post

That would be earnings, not revenue.



I would love it if they did this, you could have a single mac pro and dumb terminals for all the family computers. The terminals could look like iBooks or iMacs, but with less stuff inside.

Quote:
Originally Posted by aaarrrgggh View Post

I think the real calculation is $600 x 0.5M / 8Q * 41% profit margin = $15M. That is $0.015/share. Not bad for two days...

Oh, and how are you calculating a per share item with out outstanding common shares in your calculation? Just curious. Are you just assuming that 100 Million shares of common are outstanding? I don't know is that correct, I haven't looked at their balance sheet to know.
post #24 of 25
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Originally Posted by trragan View Post

Oh, and how are you calculating a per share item with out outstanding common shares in your calculation? Just curious. Are you just assuming that 100 Million shares of common are outstanding? I don't know is that correct, I haven't looked at their balance sheet to know.

864.95M shares outstanding.
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post #25 of 25
Quote:
Originally Posted by solipsism View Post

Where do you get your profit margin from? Hopefully not from an assumed cost of the parts. Also, that calculation doesn't account for the monthly revenue received from AT&Tfor each iPhone user.

How come with all the cost breakdowns I've seen, no one accounts for OS development costs (it didn't sprout from the Keebler Elves Jobs keeps under his desk), G&A, marketing, R&D, etc. Everyone reports the parts look to cost $X and acts like the commercials magically appear on TV for free, that the idea for the iPhone just appeared completely engineered on Ive's desk one Monday morning and a bug free OS X for ARM processors just magically appeared on network drives. I bet these soft costs are HUGE! Since Apple publicly guessed 10 million units, that would be the lowest number they'd probably amortize these (I'm sure) capitalized costs against, but the R&D amount had to be big on these. This doesn't include the cost of future upgrades, which will be amortized against sales & revenues in order to keep the SarbOx enforcers happy.
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