Apple supplier comments not likely to affect long-term financial prognosis, Gene Munster s...

Posted:
in AAPL Investors
Negative comments from two Apple suppliers about the next iPhone generation could hamper investor expectations for the next quarter, suggests Gene Munster of Loup Ventures, but predictable iPhone sales make this only a near-term risk instead of a long-term problem.




There is a "modest risk" of about 3 percent to Wall Street's revenue estimates, Munster writes, caused through two recent reports from companies embedded in the iPhone supply chain. While the June quarter's revenue guidance from analysts and investment firms hover at $52.2 billion for the period, the comments could bring the value down to between $48 billion and $51 billion.

Munster refers to AMS, the producer of VCSEL modules used for the iPhone X TrueDepth camera array, as one of the firms warning of issues, with the company advising earlier this week a "key customer" is being slow in finalizing specifications of parts for an order. It is largely thought the unnamed customer is Apple, with other analysts believing the iPhone producer is the source of half of AMS' revenue. Loup Ventures wagers that there is "a greater than 50 percent chance" AMS is referring to Apple.

TSMC, manufacturer of the A10 and A11 chips, is identified as the other negative factor, after the Taiwanese firm recently revised its full-year revenue target to the low-end of earlier forecasts, down by approximately $1 billion. This has been attributed to continued weak demand in the mobile sector, as well as uncertainty in the cryptocurrency mining market.

"Our level of concern jumps if three suppliers give a cautionary outlook," writes Munster. "To date, only two have given warnings."

For revenue in the upcoming quarterly results, iPhone is expected to contribute about 64 percent of sales, with both investors and Loup ventures reckoning 53 million units sold in the period, up 5 percent year-on-year.

For the average selling price (ASP), investors are said to expect it to be $735, up 12 percent year-on-year, while Loup is more ambitious with its estimate of $753, up 15 percent on last year. Loup thinks the iPhone X makes up more of the iPhone sales mix than thought by others, with the suggestion iPhone X accounts for 29 percent of iPhone sales in the quarter.




Services revenue will make up about 14 percent of sales in the quarter, earning just above the investor average at $8.4 billion in the quarter, making it a year-on-year improvement of 19 percent. Services revenue is increasingly important "given the weak tail of the iPhone X cycle," Munster adds, with the relatively predictable sector's growth over the last nine quarters being the rationale behind Loup's estimate.

For the other product segments, Mac is predicted to account for 9 percent of sales in the quarter and 4.2 million units, remaining flat compared to last year, while iPad revenue will make up 9 percent of sales with 8.9 million units, again flat year-on-year. While Apple does not report Watch sales data, Munster estimates revenue from the device to make up 3 percent of sales from 3.3 million units in the quarter.

Munster also raises the issue of Apple's repatriation of overseas cash stores, reminding investors that Apple announced in January that it will pay $38 billion in repatriation taxes, implying that $215 billion will be brought back to the United States. "If there was no tax holiday Apple would have paid about $80 billion in repatriation taxes, compared to the $38 billion they are actually paying," the analyst points out, along with Apple's $30 billion capital expenditure investment over the next five years.

For capital returns, Loup expects Apple will increase its buyback over the next three years by around $70 billion. For dividends, it is thought Apple will announce a one-time dividend payment worth $12 billion, and a 15 percent annual dividend increase that will cost Apple approximately $10 billion over a four-year period.

Comments

  • Reply 1 of 13
    macxpressmacxpress Posts: 4,674member
    I wonder if he still thinks Apple is going to release a new AppleTV? As in an actual Apple Television with AppleTV built into it? I believe he was very firm on that rumor and stayed on to it until the very end if I remember correctly. 
    StrangeDaysyojimbo007
  • Reply 2 of 13
    nunzynunzy Posts: 662member
    All that Apple cares about is total profit. Everything else is just a means to that end.
  • Reply 3 of 13
    Apple supplier comments not likely to affect long-term financial prognosis” 

    Captain Obvious here. Seems like we need these articles to remind the common folk and even some of “the experts” that there is more to Apple than a a rumored filled 12 week window. Look at Apple’s R&D budget. Come on man! 
    anton zuykovyojimbo007radarthekat
  • Reply 4 of 13
    macxpressmacxpress Posts: 4,674member
    nunzy said:
    All that Apple cares about is total profit. Everything else is just a means to that end.
    Isn't that the point of every company? You know...to make a profit? That being said, I don't think that's Apple's main concern. They're main concern is to make the best products it can and sell it at a fair price and just because its not cheap doesn't mean its not fair. You can't make the quality of products Apple makes and sell it cheaply. 
    edited April 2018 emoeller
  • Reply 5 of 13
    Cesar Battistini MazieroCesar Battistini Maziero Posts: 141unconfirmed, member
    nunzy said:
    All that Apple cares about is total profit. Everything else is just a means to that end.
    All that every company in the world cares about is exactly that.

    The ones who don't, have already closed.
    mike1SpamSandwich
  • Reply 6 of 13
    lukeilukei Posts: 326member
    nunzy said:
    All that Apple cares about is total profit. Everything else is just a means to that end.
    That is the legal duty of companies to its shareholders. 

    mike1SpamSandwich
  • Reply 7 of 13
    rogifan_newrogifan_new Posts: 3,676member
    Every quarter right before earnings we get all these analyst reports about iPhone production cuts supposedly from the supply chain. There’s no way to verify if they’re accurate or not. And since the fretting is always about the next quarter Apple is always perpetually doomed. In January everyone was concerned about March. Now if the March quarter is good it won’t matter because everyone has moved on to fretting about June.  And pretty soon it will be September that they’re worried about. Constant doom and gloom.
  • Reply 8 of 13
    rogifan_newrogifan_new Posts: 3,676member
    nunzy said:
    All that Apple cares about is total profit. Everything else is just a means to that end.
    That’s not what Tim Cook says. Profit is just the end result if you’re doing everything else right.
    edited April 2018
  • Reply 9 of 13
    FolioFolio Posts: 422member
    First time I’ve heard of $12 B one-time dividend. Good for Warren Buffet but as a much smaller stockholder I’d rather Tim Cook find more productive uses for it (that in turn will boost company better than 12 B that evaporates).
  • Reply 10 of 13
    anton zuykovanton zuykov Posts: 1,030member
    Apple supplier comments not likely to affect long-term financial prognosis” 

    Captain Obvious here. Seems like we need these articles to remind the common folk and even some of “the experts” that there is more to Apple than a a rumored filled 12 week window. Look at Apple’s R&D budget. Come on man! 
    Well, if there are articles that create FUD, there must be articles for de-FUD-ing the space, as well. :wink: 
    radarthekatmethetechman
  • Reply 11 of 13
    sflocalsflocal Posts: 4,338member
    Gene Munster.  A perfect example of someone that gets paid lots of money and have zero clue.
    radarthekatSpamSandwichmacxpress
  • Reply 12 of 13
    nunzy said:
    All that Apple cares about is total profit. Everything else is just a means to that end.
    All that every company in the world cares about is exactly that.

    The ones who don't, have already closed.
    This is just flat out incorrect. Are there many companies for which that it is true for, yes, however if a company chooses not to make the most profit possible does that necessitate them eventual going out of business ... nope.
  • Reply 13 of 13
    radarthekatradarthekat Posts: 2,898moderator
    Folio said:
    First time I’ve heard of $12 B one-time dividend. Good for Warren Buffet but as a much smaller stockholder I’d rather Tim Cook find more productive uses for it (that in turn will boost company better than 12 B that evaporates).
    There is a point where a business throws off/accumulates sufficient cash to afford all neccesary capital expenditures and attractive opportunities and yet still has a large amount left over to hand back to shareholders.  I think Apple happens to be one such business.  
Sign In or Register to comment.