Apple predicted to surprise with Oct. 19 earnings report

Posted:
in General Discussion edited January 2014
New accounting rules are expected to push Apple's stock even higher, as Wall Street still underestimates the profitability of the iPhone, a new report has concluded.



Last week, the Financial Accounting Standards Board approved a change to the revenue reporting methods in the generally accepted accounting principles (GAAP). Under the old rules, Apple was required to spread its profits from the sale of each iPhone over the term of the carrier contract for the device, typically two years.



In a new note to investors, Yair Reiner of Oppenheimer said that despite all of the publicity of under-reported iPhone revenue, the market still doesn't fully realize, and that will take time. The company has reiterated its outperform rating for AAPL stock and has increased its price target to $210 per share.



"Incredibly, despite all the ink spilled over iPhone accounting, we think the Street continues to highly underestimate Apple's GAAP earnings," Reiner said. "We grant this will likely become a moot point within six months, as Apple incorporates new FASB accounting rules and recognizes more iPhone sales at time of sale. But until then, Apple's EPS will continue to surprise to the upside, even if revenue comes merely in line with Street expectations."



The report said that Apple could sell an additional 7 million to 8 million iPhones in 2010 by adding Verizon and China Mobile as carriers. While a jump from AT&T to Verizon in the U.S. has long been rumored, Apple is reportedly already in negotiations with China Mobile, the world's largest wireless carrier, to offer the iPhone.



Factoring in a potential launch of Apple's long-rumored tablet, the report also sees an additional 50 cents to $1.00 earnings per share, assuming the product could sell a half-million to one million units per quarter at $1,000 each. Sources have told AppleInsider that the 10-inch touchscreen device will debut in early 2010.







Apple is set to announce its fourth-quarter earnings in a conference call on Oct. 19, scheduled for 5 p.m. ET and 2 p.m. PT, the company announced this week. The company's fiscal year ended Saturday.
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Comments

  • Reply 1 of 47
    Erm...if it's predicted, then it's not a surprise
  • Reply 2 of 47
    Quote:
    Originally Posted by AppleInsider View Post


    New accounting rules are expected to push Apple's stock even higher, as Wall Street still underestimates the profitability of the iPhone, a new report has concluded.



    Aargh! How many times has it been noted that this is all probably factored into AAPL's stock price?



    The only one 'underestimating' anything is AI, regarding the blockheadedness of this analyst.
  • Reply 3 of 47
    Before you say it Mr Ballmer, there it goes again another rounding error in Apple's favor. Someone must really have it in for Microsoft I guess. Suggest you might look in the mirror.

    ht
  • Reply 4 of 47
    teckstudteckstud Posts: 6,476member
    Well I'd like to remind you all again that I have been a contributing factor this quarter with my iPhone purchase along with my excellent word of mouth as I have also switched 2 other friends over when they saw how my iPhone completes me.

    This quarter I hopefully will buy either a new iMac or a new MBP 13", whichever gets matte first.
  • Reply 5 of 47
    mystigomystigo Posts: 145member
    Quote:
    Originally Posted by michaelab View Post


    Erm...if it's predicted, then it's not a surprise



    Aw. You beat me to it.
  • Reply 6 of 47
    newbeenewbee Posts: 2,055member
    Quote:
    Originally Posted by teckstud View Post


    Well I'd like to remind you all again that I have been a contributing factor this quarter with my iPhone purchase along with my excellent word of mouth as I have also switched 2 other friends over when they saw how my iPhone completes me.

    This quarter I hopefully will buy either a new iMac or a new MBP 13", whichever gets matte first.





    You have made my day, well, along with Apple heading up nicely. I read and reread your post and could hardly believe that it was, in most part, a POSITIVE post. Is this the new and improved teckstud? If so, I'm impressed with what a 3 day "vacation" can do for a person ... welcome back.
  • Reply 7 of 47
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by anantksundaram View Post


    Aargh! How many times has it been noted that this is all probably factored into AAPL's stock price?



    The only one 'underestimating' anything is AI, regarding the blockheadedness of this analyst.



    I think what we'll soon learn is how much of an influence non-professional traders have on a stock price. Those uninformed traders who are buying and selling Apple without fully understanding the financials may very well be surprised when they see the next quarterly results. If there are enough of them who see Apple's results suddenly skyrocket, they may well drive up the price of Apple's stock a little more.



    A questions: How does this affect previous iPhone sales? Does Apple update their previous quarters results? Or do they continue to account for previous sales using the old method until 2 years after the purchases and only apply the new method to new purchases?



    How about they take all of the unearned earnings from previous sales and take it as a lump sum earning on their next quarterly report!
  • Reply 8 of 47
    al_bundyal_bundy Posts: 1,525member
    Quote:
    Originally Posted by htoelle View Post


    Before you say it Mr Ballmer, there it goes again another rounding error in Apple's favor. Someone must really have it in for Microsoft I guess. Suggest you might look in the mirror.

    ht



    i bet ballmer is crying his eyes out as he counts the cash he gets for every single iphone and ipod touch sold. in addition to every single android phone and the palm pre



    and SL is going to help drive Exchange 2007 and Exchange 2010 sales
  • Reply 9 of 47
    chris_cachris_ca Posts: 2,543member
    Quote:
    Originally Posted by anantksundaram View Post


    The only one 'underestimating' anything is AI, regarding the blockheadedness of this analyst.



    AI does an article on a report by Yair Reiner of Oppenheimer and AI is somehow 'underestimating' something?
  • Reply 10 of 47
    Quote:
    Originally Posted by teckstud View Post


    Well I'd like to remind you all again that I have been a contributing factor this quarter with my iPhone purchase along with my excellent word of mouth as I have also switched 2 other friends over when they saw how my iPhone completes me.

    This quarter I hopefully will buy either a new iMac or a new MBP 13", whichever gets matte first.



    thanks teckstud. My apple holdings appreciate your efforts. I've contributed some too. And like you i'm in the market for a 13" MBP when it gets matte.
  • Reply 11 of 47
    Quote:
    Originally Posted by Chris_CA View Post


    AI does an article on a report by Yair Reiner of Oppenheimer and AI is somehow 'underestimating' something?



    I think anantksundaram meant he (anantksundaram) doesn't agree with Reiner's interpretation, therefore AI was blockheaded for reporting it. That's not a point of view i share.
  • Reply 12 of 47
    taurontauron Posts: 911member
    In other news: Ballmer is predicted to "surprise" with announcement that he is really mentally insane.
  • Reply 13 of 47
    jb510jb510 Posts: 128member
    The most informative part of this post is the graph... It's amazing just how bad analyists have been at predicting Apple's price... And now you want to listen to them?



    Personally I can't believe there is ANYONE out there that hasn't already factored this in to Apple's price and analyists that claim otherwise should be fired for incompetance.... But as we've seen over the last decade incompetance seems to be a key job skill for them.
  • Reply 14 of 47
    Quote:
    Originally Posted by Wiggin View Post


    I think what we'll soon learn is how much of an influence non-professional traders have on a stock price.



    Not much. The institutional traders are the ones who really move stock prices.
  • Reply 15 of 47
    mpantonempantone Posts: 1,734member
    Quote:
    Originally Posted by Dr Millmoss View Post


    Not much. The institutional traders are the ones who really move stock prices.



    Correct. Joe Everyday Trader counts very little.



    AAPL shares held by institutions & mutual funds: 72.30%



    Source: Yahoo! Finance
  • Reply 16 of 47
    jazzgurujazzguru Posts: 6,435member
    Quote:
    Originally Posted by mpantone View Post


    Correct. Joe Everyday Trader counts very little.



    AAPL shares held by institutions & mutual funds: 72.30%



    Source: Yahoo! Finance



    Average Joes can participate in mutual funds. I do.
  • Reply 17 of 47
    When have apple not made money???
  • Reply 18 of 47
    parkyparky Posts: 383member
    How many times does it need to be said that the 24 month spread of revenue and costs is NOT related to any carrier contracts. It is all to do with giving free updates over the life of the product.



    This is why the Apple TV is also included in the same rules, as it gets free updates, BUT has no carrier contract.



    Please get this right and stop perpetuating the myth that it is linked to carrier contracts.
  • Reply 19 of 47
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by jazzguru View Post


    Average Joes can participate in mutual funds. I do.



    But mutual fund investors don't have any control over how the mutual fund trades -- the fund managers have that control. That's the deal you make as a mutual fund investor. Institutions are the majority influence in the markets -- individual investors are along for the ride.
  • Reply 20 of 47
    jazzgurujazzguru Posts: 6,435member
    Quote:
    Originally Posted by Dr Millmoss View Post


    But mutual fund investors don't have any control over how the mutual fund trades -- the fund managers have that control. That's the deal you make as a mutual fund investor. Institutions are the majority influence in the markets -- individual investors are along for the ride.



    Good point. I actually thought about that after I posted.



    Mutual fund holders don't have direct control over the day-to-day buy and sell, but they can buy or sell their mutual fund shares which indirectly influence things.



    But yes, institutions are pulling the strings.
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