Earnings preview: Wall Street expects flat March quarter, awaiting new products in late 2014

Posted:
in AAPL Investors edited April 2014
With no major new products launched in the just-concluded March quarter, analysts on Wall Street don't expect big things from Apple when the company reports its earnings on Wednesday, generally projecting for revenue to be about flat with the same period from a year ago.

Apple


Investor expectations cited by analyst Maynard Um of Wells Fargo Securities suggest that Apple will report sales of $43.6 billion for the quarter, which spans the months of January through March. He has pegged the average earnings per share estimate at $10.15 for the quarter.

Gene Munster of Piper Jaffray has generally similar numbers, with his research suggesting Wall Street is projecting revenue of $43.5 billion, and earnings per share of $10.17.
A year ago, the March 2013 quarter marked the first time in a decade that Apple saw its profits decrease.
Both analysts believe Apple will beat those expectations, riding stronger-than-expected sales of both the iPhone and iPad. Munster's "bogies" for the March quarter call for iPhone sales between 38 million and 39 million, and iPad sales of between 20 million and 22 million. Um, meanwhile, sees sales of 39 million iPhones and 21 million iPads.

It may have been a tough quarter for the Mac, as Munster believes sales may have dipped 6 percent year over year to 3.7 million units in March. Um's projections are slightly stronger at 3.85 million units.

It was during this same quarter a year ago that Apple saw its profits fall for the first time in a decade. Despite record second quarter sales of $43.6 billion, Apple saw its profits fall about 18 percent to $9.5 billion, or $10.09 per diluted share.

Apple sold 37.4 million iPhones, 19.5 million iPads, and just under 4 million Macs in the March 2013 quarter. This year, iPhone and iPad sales are expected by Wall Street to rise slightly, while Mac sales are projected to fall.

Analysts are also expecting Apple to announce a slight increase to its share buyback program and quarterly dividend this week. Apple currently pays $3.05 per share to investors each quarter, while the company has already repurchased billions of dollars of its own shares as part of an ongoing program.

Apple will report its March quarter results on Wednesday after markets close, and AppleInsider will have full, live coverage.

Looking ahead to the June quarter, current Wall Street estimates call for Apple to see $38.3 billion in revenue, with gross margins at 36.5 percent, according to Munster.
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Comments

  • Reply 1 of 67
    pmzpmz Posts: 3,433member
    Its not shaping up to be a blockbuster year for Apple at all. I may be a big fan and often apologist, but I do not make excuses for no new products since Oct 2013.

    Furthermore, its not possible for Apple to release everything that people are predicting this year. Not only do they never release the full boat of rumored products that arise during the year, but the amount on the table this year is insane: iWatch, AppleTV, iOS 8, OS 10.10, 4.7" iPhone, updated iPads, Retina MacBook Air, overdue Mac mini, iMac spec bump....

    Its not all happening before the end of this year, and as much as I wish it would.
  • Reply 2 of 67
    herbapouherbapou Posts: 2,201member
    with Apple going down at most of the earnings, lot of people are going for the exit.
  • Reply 3 of 67
    radarthekatradarthekat Posts: 2,468moderator
    sog35 wrote: »
    "With no major new products launched in the just-concluded March quarter, analysts on Wall Street don't expect big things from Apple when the company reports its earnings on Wednesday,"

    Than WTF was Google's earnings last week?

    Google reported $5 earnings per share and Apple is expected to report over DOUBLE that with a share price lower.

    In what planet is $10 < $5?

    Google reported GAAP profits of $5.00 EPS vs $4.97 last year.  A 1% increase.  WTF.

    Further,
    if anyone actually looked at Google's fiscal 2011 earnings and then at its fiscal 2013 earnings they would see that Google's earnings in 2013 were 25% higher than in 2011.
    If anyone actually looked at Apple's fiscal 2011 earnings and then at its fiscal 2013 earnings they would see that Apple's earnings in 2013 were 40% higher than in 2011.

    Why this comparison? Because Jobs died at the end of Apple's 2011 fiscal year and a lot of people thought Apple would do poorly without him. Many of those same people speak of Google having potential for higher growth than Apple. But this evidence shows things aren't working out this way.
  • Reply 4 of 67
    tallest skiltallest skil Posts: 43,315member
    Originally Posted by herbapou View Post

    with Apple going down at most of the earnings, lot of people are going for the exit.

     

    The 4Tst Annual FUDge Bake-off!

  • Reply 5 of 67
    maccherrymaccherry Posts: 924member
    It is never enough, nor will it ever be enough money for these clowns. Even if we gave those investors and the wall street crooks printing presses from the treasury department as well as all the ink and paper they could very use they would still bitch about not having enough money.
    Between 07 and 08 the feds gave the financial markets over 18 trillion dollars to reconcile the debt THEY created on the economy. And where was all that debt?
    ON EXCEL SPREADSHEETS.
    They made off with 18 plus trillion in chedda; yet still complain that they ain't got no damn money!!!!!!
    QE was 85 billion a month or 1 trillion 20 billion a year. Free, socialized money that is still being pumped into the hands of the rich each month.
    And that ain't enough either.
    SMDH!
  • Reply 6 of 67
    apple ][apple ][ Posts: 8,360member

    I've made the mistake of taking AAPL into earnings before, and I won't be doing that anymore, since I've gotten burned a few times. I might as well go to Las Vegas and play roulette or something. At least there you get served free drinks by chicks with nice boobs. If somebody is uber long AAPL and has been long for a long time, then obviously they don't have to worry about it.

  • Reply 7 of 67
    Quote:

    Originally Posted by sog35 View Post

     

     

    Agree.  Its total BS that Google gets forgiven for having slow earnings growth while Apple gets crushed.

     

    But this is Wall Street 101.  Stock Rotation.  I expect Wall Street to rotate out of Google and into Apple in 6-12 months.  I won't be surprised to see Google at $400 and Apple at $650 by the end of the year after Wall Street fleeces enough of Main Street to buy Google at $550+


     

    Yeah that could very well be true.  Google just gets some love because some of the far-in-the-future stuff that they're working on (self-driving cars, contact lenses that can monitor glucose levels), plus the robotics purchases and Glass.  While Apple makes money hand over fist, they haven't announced any new product lines in awhile.  They're the most profitable company on the planet, have the highest valuation, and the most valuable brand.  "No new products" is about the only thing that you can complain about.  Cook alluded to some new stuff this year, so I bet we'll see something cool come from them before the summer's out.

  • Reply 8 of 67
    shahhet2shahhet2 Posts: 127member
    Quote:
    Originally Posted by sog35 View Post

     

     

    Agree.  Its total BS that Google gets forgiven for having slow earnings growth while Apple gets crushed.

     

    But this is Wall Street 101.  Stock Rotation.  I expect Wall Street to rotate out of Google and into Apple in 6-12 months.  I won't be surprised to see Google at $400 and Apple at $650 by the end of the year after Wall Street fleeces enough of Main Street to buy Google at $550+


    There have been so many comments in past comparing the Apple vs Google vs Amazon in earnings, but I hope regular person understands that valuation of the company comes from PEG Ratio (Price/Earnings to Growth ratio) and not PE ratio (Price to Earnings ratio) as everyone seems to think.

    This is how Financial institutions  does valuation of the stock.

    There is enough information their including wikipedia if anyone wants to read on it.

     

    If you compare Growth for Google in the two April quarters for year 2014 and 2013 you will see this from their reports.

    "Google Inc. reported consolidated revenues of $15.42 billion for the quarter ended March 31, 2014, an increase of 19% compared to the first quarter of 2013. "

    "Google Inc. reported consolidated revenues of $13.97 billion for the quarter ended March 31, 2013, an increase of 31% compared to the first quarter of 2012"

    This shows 31% and 19% growth (See PEG Ratio) for first quarter for 2013 and 2014.

     

    Now if you compare same of that to Apple, Apple is expecting same revenue for this quarter as for the year 2013 last quarter.

    So this year, Analyst are expecting Apple to have zero growth in revenue (Bring again this to PEG factor)

    For last year, this quarter, "For the quarter ended March 30, 2013. The Company posted quarterly revenue of $43.6 billion compared to revenue of $39.2 billion", Which is about 10% growth.

    So Google got, 31% and 19% growth, while Apple got 10% and 0%(Expected) growth in those two quarters.

     

    This is the exact reason Amazon has such a higher valuation, because their Growth is even higher then Google.

    Now if you compare PEG ratio for Apple vs Google vs Amazon, you may see the reason why some companies have very high valuation.

     

    Why did Apple stock reached $700 two years ago, you guessed it right this time. Two years ago Apple's revenue growth was in mid 20's and that's why it's stock was valued $700. (There was growth factor for Apple which is missing now)

    Analysts don't look at Stock based onon their love/hate relationship like us.

     

    Now as far as Apple is concerned and if We talk about reality rather then thinking from love/hate point of view, you will see that Apple has already saturated high end US/Europe/Japan market. Other markets like Asia, Africa, LATAM prefers to go low end phones for their own reasons.

     

    For Apple to have higher valuation, they need to find new stream of revenue, which will bring growth back to Apple and in turn more valuation.

    Again Whenever you see the stock valuation, think in terms on PEG (Growth) and not just PE.

     

    I have big investments in both Google and Apple from some time and I am loosing my patients with Apple too. If Apple will not show new stream of revenue by end of year, I am planning to exit my positions as well but I just have hope that they will bring something new which can bring growth back.

     

     

  • Reply 9 of 67
    jkichlinejkichline Posts: 1,292member

    I bought at $74/share and am playing long. Sure I could have sold at $704/share but I didn't. Why? Because I believed that Apple did not make a misstep and wall street (in their idiotic wisdom) thought they did. Apple is still raking in profits and WS is penalizing them for it. Why? I have no idea.

     

    Now the fact is that WWDC is only a month away. For those of you who can't wait until then... go take your stock elsewhere and quit complaining here. You can complain to Google when the gravy train of overinflated stock based on advertising takes a dump on you.

  • Reply 10 of 67

    For an operations guy, Tim Cook's product update/launch timetable is totally puzzling.

     

    They're all seemingly bunched in the 4th quarter of the calendar year for 2014 too. The problem is, consumer wallets have already seen nine months go by. Moreover, the global supply chain is frantically working its b*** off for everyone for the holiday season, increasing the chances of delays and stock-outs.

     

    I could understand this happening in a transition year -- 2013 -- as Cook and his new team were being put in place and settling in, but it would have been nice to see some type of normalcy return in 2014.

     

    Not impressed. Hopefully, 2015. :\

  • Reply 11 of 67
    jungmarkjungmark Posts: 6,547member
    pmz wrote: »
    Its not shaping up to be a blockbuster year for Apple at all. I may be a big fan and often apologist, but I do not make excuses for no new products since Oct 2013.

    Furthermore, its not possible for Apple to release everything that people are predicting this year. Not only do they never release the full boat of rumored products that arise during the year, but the amount on the table this year is insane: iWatch, AppleTV, iOS 8, OS 10.10, 4.7" iPhone, updated iPads, Retina MacBook Air, overdue Mac mini, iMac spec bump....

    Its not all happening before the end of this year, and as much as I wish it would.

    Mac Pros don't count?
  • Reply 12 of 67
    tallest skiltallest skil Posts: 43,315member
    Originally Posted by jungmark View Post

    Mac Pros don't count?

     

    Yeah, the announcement being last year doesn’t mean they had any sales last year. It certainly counts.

  • Reply 13 of 67
    Quote:
    Originally Posted by jkichline View Post

    Apple is still raking in profits and WS is penalizing them for it. Why? I have no idea.

    The market -- rightly or wrongly (although I think wrongly, but I am getting a bit frustrated myself) -- perceives lack of growth opportunities in Apple. Sales have been relatively flat, and profit has declined. The market's current guess is the company is in Microsoft mode (in the early 2000s) when it started to go sideways, milking cash flows from the assets-in-place. But, much of the value associated with the assets-in-place has already been priced in (including the necessary updates/improvements).

     

    Apple has yet to prove them wrong.

     

    I am surprised you think it's complicated to understand why.

  • Reply 14 of 67
    Quote:

    Originally Posted by jungmark View Post



    Mac Pros don't count?

    Not really, from a cash flow standpoint. Rounding error. That's simply a fact, not an opinion.

  • Reply 15 of 67
    jungmarkjungmark Posts: 6,547member
    For an operations guy, Tim Cook's product update/launch timetable is totally puzzling.

    They're all seemingly bunched in the 4th quarter of the calendar year for 2014 too. The problem is, consumer wallets have already seen nine months go by. Moreover, the global supply chain is frantically working its b*** off for everyone for the holiday season, increasing the chances of delays and stock-outs.

    I could understand this happening in a transition year -- 2013 -- as Cook and his new team were being put in place and settling in, but it would have been nice to see some type of normalcy return in 2014.

    Not impressed. Hopefully, 2015. :\

    It's not puzzling at all. The Dec qtr is the best qtr to release new consumer electronic products because of the gift giving season. I don't buy that consumers already spent money in the prev 9 months and can't get something in the Dec qtr.

    I rather see too much demand than too little. Tim knows what he is doing.
  • Reply 16 of 67
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by anantksundaram View Post

     

    For an operations guy, Tim Cook's product update/launch timetable is totally puzzling.

     

    They're all seemingly bunched in the 4th quarter of the calendar year for 2014 too. 


     

    Yeah, releasing everything around the same time strikes me as strange too.

     

    It's not like we don't know what's going to happen, based on past history. Every other day, we'll probably be reading about some sort of delays, production difficulties and who knows what else. Even though many products will launch, most of the press surrounding it will be negative.

  • Reply 17 of 67
    jkichlinejkichline Posts: 1,292member

    I didn't say anything about it being complicated to understand. Apple has a history of creating new product categories and succeeding where other companies have failed. I have no idea why wall street hasn't figured that out by now. Their silence is the calm before the storm when they release the next thing in the beginning of June. Sadly, every analyst and other tech company has yet to figure this out.

  • Reply 18 of 67
    Quote:
    Originally Posted by jkichline View Post

     

    I didn't say anything about it being complicated to understand. Apple has a history of creating new product categories and succeeding where other companies have failed. I have no idea why wall street hasn't figured that out by now. Their silence is the calm before the storm when they release the next thing in the beginning of June. Sadly, every analyst and other tech company has yet to figure this out.


     

    Figure what out? That Apple might possibly, just maybe , might happen, could be great around the corner introduce something.

     

    Yeah... every big investment house will value a company on wishes and dreams instead of growth.

  • Reply 19 of 67
    Quote:
    Originally Posted by jkichline View Post

     


    Sadly, every analyst and other tech company has yet to figure this out.

    Um.... not that I particularly care about what the analysts think, but most analysts have, indeed, 'figured this out'. Most price targets for Apple are in the mid-to-upper 600s. So, I have no clue what you're talking about.

  • Reply 20 of 67
    Quote:
    Originally Posted by jungmark View Post

     


    I don't buy that consumers already spent money in the prev 9 months and can't get something in the Dec qtr.

    Except for Apple fans like us who have an idea of what might be on tap and when (since we avidly follow and speculate on all this stuff), most people don't wait around, keeping hundreds of dollars in reserve, expecting some ephemeral/rumored product or update to arrive from 'Apple'. 

     

    Just ask around.

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