RBC's Abramsky, AmTech's Wu lead Apple analysts for Q2
RBC Capital Market's Mike Abramsky and American Technology Research's Shaw Wu emerged atop the list of Apple analysts in providing the most accurate estimates for Apple's second fiscal quarter of 2008, and both are out Thursday with new research notes on the company.
Apple said Wednesday that earnings rose over 36 percent to $1.16 per share on revenues of $7.51 billion and a gross margin of 32.9 percent for the three-month period ending March 29th, driven by sales of 2.29 million Macs, 10.64 million iPods, and 1.7 million iPhones.
Of the eight analysts for which AppleInsider had data leading into the earnings report, Abramsky's model stood out as the most well-rounded in light of the company's actual results. He had predicted earnings of $1.11 per share on revenues of $7.2 billion and a gross margin of 34 percent, which factored in sales of 2.2 million Macs, 1.8 million iPhones, and 10 million iPods.
Wu was a close second, and along with Lehman's Ben Reitzes came the closest to predicting the company's actual gross margin -- an indicator of a company's profitability at the most fundamental level -- with his estimate of 33.5 percent. The remainder of his forecast included per-share earnings of $1.10 on $7 billion in revenues, based on estimated sales of 2.15 million Macs, 1.5 million iPhones, and 10 million iPods.
In a research note release to clients Thursday, Abramsky reiterated his Buy rating on shares of Apple, bumping his price target by $10 to $200 a share. He called on investors to realize that the advent of a 3G iPhone in the near term will enable the Cupertino-based company to tap a global market five times the size of the MP3 player market and ten times the size of the worldwide PC market.
According to the analyst, other pending catalysts for the stock include higher capacity iPod touch players and refreshed MacBooks with aluminum enclosures later in the calendar year, as well as a boost in international Mac sals as consumers in foreign countries see increased exposure to the company's well-received iPhone handset.
"Apple may phase out the 80GB Classic following the launch of a 64GB iPod touch," he said, adding that greater availability of video content on the iTunes Store/Apple TV also creates a need for current generation iPods that are video capable, and thus may drive a replacement cycle for a significant number of consumers.
In his own report Thursday, Wu noted that some investors may be concerned that Apple's revenue upside did not translate into big per-share earnings upside, and cited gross margin as the culprit.
"One may beg the question of whether Apple has lost its unparalleled ability to capitalize on declining component prices," he wrote. "We believe it is too early to declare this, but we believe this could remain a lingering concern."
As such, Wu maintained his Neutral rating and positive longer-term fundamental view on the company, but continued to wave caution at buying into shares at current levels.
"We remain concerned with volatility in shares and a potential vacuum before the launch of 3G iPhones and new Macs," he said.
Apple said Wednesday that earnings rose over 36 percent to $1.16 per share on revenues of $7.51 billion and a gross margin of 32.9 percent for the three-month period ending March 29th, driven by sales of 2.29 million Macs, 10.64 million iPods, and 1.7 million iPhones.
Of the eight analysts for which AppleInsider had data leading into the earnings report, Abramsky's model stood out as the most well-rounded in light of the company's actual results. He had predicted earnings of $1.11 per share on revenues of $7.2 billion and a gross margin of 34 percent, which factored in sales of 2.2 million Macs, 1.8 million iPhones, and 10 million iPods.
Wu was a close second, and along with Lehman's Ben Reitzes came the closest to predicting the company's actual gross margin -- an indicator of a company's profitability at the most fundamental level -- with his estimate of 33.5 percent. The remainder of his forecast included per-share earnings of $1.10 on $7 billion in revenues, based on estimated sales of 2.15 million Macs, 1.5 million iPhones, and 10 million iPods.
In a research note release to clients Thursday, Abramsky reiterated his Buy rating on shares of Apple, bumping his price target by $10 to $200 a share. He called on investors to realize that the advent of a 3G iPhone in the near term will enable the Cupertino-based company to tap a global market five times the size of the MP3 player market and ten times the size of the worldwide PC market.
According to the analyst, other pending catalysts for the stock include higher capacity iPod touch players and refreshed MacBooks with aluminum enclosures later in the calendar year, as well as a boost in international Mac sals as consumers in foreign countries see increased exposure to the company's well-received iPhone handset.
"Apple may phase out the 80GB Classic following the launch of a 64GB iPod touch," he said, adding that greater availability of video content on the iTunes Store/Apple TV also creates a need for current generation iPods that are video capable, and thus may drive a replacement cycle for a significant number of consumers.
In his own report Thursday, Wu noted that some investors may be concerned that Apple's revenue upside did not translate into big per-share earnings upside, and cited gross margin as the culprit.
"One may beg the question of whether Apple has lost its unparalleled ability to capitalize on declining component prices," he wrote. "We believe it is too early to declare this, but we believe this could remain a lingering concern."
As such, Wu maintained his Neutral rating and positive longer-term fundamental view on the company, but continued to wave caution at buying into shares at current levels.
"We remain concerned with volatility in shares and a potential vacuum before the launch of 3G iPhones and new Macs," he said.
Comments
I hope they don't phase out the classic line. I suppose they will at some point, but I love the design.
The only vacuum is the one that is sucking what is left of his brain.
What the hell is he talking about? The iPhone adds little to the bottom line right now and Macs are selling like hot cakes. We have only 6 weeks before June and Apple is still having a hard time stocking the iPhone.
He is full of it and he knows it, but won't admit it. He is still mad that we are a mere 5 points from his yearly target and we will surpass it easily in the next two months.
"We remain concerned with volatility in shares and a potential vacuum before the launch of 3G iPhones and new Macs," he said.
The only vacuum is the one that is sucking what is left of his brain.
What the hell is he talking about? The iPhone adds little to the bottom line right now and Macs are selling like hot cakes. We have only 6 weeks before June and Apple is still having a hard time stocking the iPhone.
He is full of it and he knows it, but won't admit it. He is still mad that we are a mere 5 points from his yearly target and we will surpass it easily in the next two months.
More on topic, it'll be interesting if Apple remove the iPod Classic. You can be sure that's in the future, but you can be sure we need to see an iPod Nano Touch (iPod Tickle?) first... That way the iPod classic will be sandwiched between two touch models. You can see Apple making the jump of switching the nano to touch sooner than you can see them dropping the Classic. That's my prediction for the September '08 update.
"We remain concerned with volatility in shares and a potential vacuum before the launch of 3G iPhones and new Macs," he said.
What the hell is he talking about? The iPhone adds little to the bottom line right now and Macs are selling like hot cakes. We have only 6 weeks before June and Apple is still having a hard time stocking the iPhone.
Obviously he was talking about that period in which potential buyers will hold off if they believe that new models are about to be released.
As for the iPhone contributing little to the bottom line, remember that Apple's revenue sharing with AT&T to start. If my math is right, overall, the five million or more iPhones sold to date have earned nearly one and a quarter billion dollars.
Shaw Wu has been not too bad compared to other analysts like Toni Sacconaghi (who famously advised people to sell apple and buy Dell) but this time I have questions for Shaw's reasoning.
Is he saying we should buy the stock AFTER everybody realizers the significance of the iPhone SDK? as the article says the 'iDevice' market is potentially 10 times the size of the PC market? John Doerr Google and Amazon financier said during the SDK presentation it's the birth of a new platform bigger than the PC. When the stock blows up after investors finally wake up in June that's not the time to buy, the time to buy is in a dip.
Maybe he's suggesting to wait for the stock to fall before June before buying? What's the chance of that? People dumb enough to sell Apple now? Maybe (If so I'm going to buy more!)
I loaded up several thousand bucks more when the analysts knocked the stock down to 118 some months ago and I'm going to buy more if the stock gets whacked again.
When Aapl was in the 120's I told everyone to load up because when do you get a chance to buy into a company which has the squeeze on a 'new platform' like the invention of the PC when the stock is so down, its like an IPO at bargain prices. Even if the stock dips again 160s now Apple is going up because I believe in the SDK's significance.
Congratulations Abramsky! You've won the AI Gold Star for Analyst Competence.
Now, every quarter AI should award one such gold star, and after a year or so, we'll see if one
analyst has all of them, or if they are distributed somewhat randomly.
I admit: I am constantly confused by Wu. Nuff said on that.
Congratulations Abramsky! You've won the AI Gold Star for Analyst Competence.
Now, every quarter AI should award one such gold star, and after a year or so, we'll see if one
analyst has all of them, or if they are distributed somewhat randomly.
Actually, this would be rather cool. All the major analysts could be graded on 2-4* key factors of their predictions and compile it every quarter. For all the people who complain everytime an analyst's report is cited it might be nice to be able to reference that analyst's "grade." I wish I had time to look into this...
* Earnings per Share, Revenues, Gross Margin, # of Macs sold...
I see this growth rate as indicative of a halo effect starting to play out that touches so many aspects of Apple's business.
Given that, I took a swag at articulating the strategic pieces at play for Apple in a post lovingly called, 'Holy Shit! Apple?s Halo Effect.'
Check it out if interested.
Cheers,
Mark
AI Geniuses: Could you guys possibly create a chart on these analysts (a la Numbers) so we could track them on each and every one of their calls?
This would be a tremendous "Apple Analyst Analysis for Anal-Retentive Apple Owners"!
He only predicted $1.10/share, and Abramsky predicted $1.11.
Are we going by "The Price is Right" rules, where Gene Munster's $1.19 doesn't count because even though he was closer, he went over?
Good grief, I've been asking for this for some time... glad to see AI calling 'em on their projections!
AI Geniuses: Could you guys possibly create a chart on these analysts (a la Numbers) so we could track them on each and every one of their calls?
This would be a tremendous "Apple Analyst Analysis for Anal-Retentive Apple Owners"!
You kind of stepped on my "Could you guys possibly create a chart on these analysts (a la Numbers) so we could track them on each and every one of their calls?" request that I have been calling for.
It is hard to believe that people are cheering for Shaw Wu. He finaly earned his pay.
You kind of stepped on my "Could you guys possibly create a chart on these analysts (a la Numbers) so we could track them on each and every one of their calls?" request that I have been calling for.
It is hard to believe that people are cheering for Shaw Wu. He finaly earned his pay.
If any of you guys are interested in working on this in our wiki system, which is available but not live, let me know and I'll point you to it.
Best,
K
Saturday, May 3, 2008
http://bullcross.blogspot.com/2008/0...t-in_1251.html
In early April, Bullish Cross offered its own earnings forecasts and estimates for Apple's (Nasdaq: AAPL) 2008 fiscal second quarter reported on April 23, 2008. Bullish Cross is proud to report that its forecasts generally beat the street, and several of its prominent financial analysts in giving one of the most accurate earnings predictions on Wall Street.
Comparison between Bullish Cross & Wall Street Firms
(Best Estimate Highlighted in Blue; Worst Highlighted in Red)
Apple, Inc. Actual Earnings
Revenue: $7.512b
EPS: $1.16
Gross Margin: 32.9%
iPhones: 1.703m
iPods: 10.644m
Macs: 2.289m
Andy Zaky, Bullish Cross
Revenue: $7.449b
EPS: $1.31
Gross Margin: 36.0%
iPhones: 1.700m
iPods: 10.5m
Macs: 2.350m
Gene Munster, Piper Jaffray
Revenue: $6.900b
EPS: $1.19
Gross Margin: 36.0%
iPhones: 1.6-2.0m
iPods: 10.5m
Macs: 2.100m
Shaw Wu, AmTech
Revenue: $7.000b
EPS: $1.10
Gross Margin: 33.5%
iPhones: 1.5m
iPods: 10m
Macs: 2.150m
Richard Gardner, Citigroup
Revenue: $7.000b
EPS: $1.23
Gross Margin: 36.5%
iPhones: 1.5m
iPods: 9.5m
Macs: 2.100m
Ben Reitzes, Lehman Bros.
Revenue: $6.950b
EPS: $1.05
Gross Margin: 33.2%
iPhones: 1.5m
iPods: 10.3m
Macs: 2.090m
Mike Abramsky, RBC Capt.
Revenue: $7.200b
EPS: $1.11
Gross Margin: 34.0%
iPhones: 1.8m
iPods: 10.0m
Macs: 2.200m
Katy Huberty, Morgan Stan.
Revenue: $6.634b
EPS: $1.10
Gross Margin: 35.8%
iPhones: 1.0m
iPods: 8.5m
Macs: 2.020m
Scott Craig, BofA
Revenue: $6.900b
EPS: $1.07
Gross Margin: n/a
iPhones: 1.22m
iPods: 10.0m
Macs: 2.021m
As noted in the table above, Bullish Cross beat Wall Street analysts in predicting Apple's second quarter earnings results almost across the board. In terms of revenue, Bullish Cross made the best call in forecasting $7.449 billion - a mere 63 million or 0.8% within the actual numbers. The next best analyst, Mike Abramsky, forecasted $7.2 billion - a $312 million or 4.1% miss. By far the worst call on Wall Street came from none other than Katy Huberty of Morgan Stanley who's revenue estimates missed the number by almost a cool billion. She estimated sales of $6.634 billion and Apple reported $7.512 billion or nearly $878 million (11.7%) above Ms. Huberty's estimates.
Gene Munster of Piper Jaffray made the best call in predicting EPS. Though, with a little luck at his side. Munster was looking for 36% in gross margins and $6.9 billion in revenue to help him reach his $1.19 in EPS. Yet, Apple reported nowhere close to either $6.9 billion or 36% in gross margins. Munster was lucky in calling EPS because his revenue estimates were $612 million below what Apple actually reported. Under those circumstances, one's EPS estimates would normally miss as well.
Ben Reitzes wins in calling gross margins but misses big time in both EPS and revenue estimates. How Reitzes made such a call in gross margins is anyone's guess as I noted extensively above. Maybe he estimated gross margins in the same way he estimated revenue and EPS. By sheer dumb luck. His estimates missed revenue by $562 million - that's more than 1/2 billion!
Andy Zaky of Bullish Cross wins in calling iPhone unit sales. Bullish Cross estimated 1.7 million units and Apple reported unit sales of 1.703 million units. The next best call was by RBC Capital analyst Mike Abramsky who's estimates missed by 100,000. Yet, worthy of note is the idiotic call made by Katy Huberty of Morgan Stanley. She estimated that Apple would only sell 1 million iPhone units on the quarter despite the fact that Steve Jobs, during MacWorld, all but admitted that Apple sold 300,000 iPhones in the first two weeks of the quarter! This suggests that Apple enjoyed a run-rate of nearly 150,000 units a week. According to Katy Huberty, either Apple's iPhone run-rate should have dramatically collapsed during the quarter or Apple's quarter should have had a duration 6.5 weeks or 1.5 months. Still, I have to hand it to Morgan Stanely for indefatigably continuing to employ Ms. Huberty despite her clear and obvious shortcoming as a financial analyst.
Andy Zaky of Bullish Cross and Gene Munster of Piper Jaffray made the best calls in estimating total iPod unit sales. Yet, I think credit should go to Gene Munster as Bullish Cross' estimates of iPod unit sales generally track Gene Munster's estimates based on his readings of NPD data. I note in a previous artical how Gene Munster has been unusally accurate in being able to predict Apple's iPod unit sales. Both Gene Munster and I were looking for 10.5 million iPod units and Apple reported 10.644 million. Ms. Huberty, once again, demonstrated her shrewdness as an analyst with her great call of estimating sales of 8.5 million iPod units - she only missed by 2.1 million units (being facetious). Why anyone should listen to word Katy Huberty says is beyond me.
Andy Zaky of Bullish Cross made the best call in estimating total Mac sales. Bullish Cross estimated sales of 2.350 million Macs and Apple reported sales of 2.289 million macs - that's a 61,000 unit difference or about 2.4 days of sales as noted above. The next best call came from Mike Abramsky of RBC Capital who estimated unit sales of 2.2 million macs or nearly 89,000 units below what Apple actually reported. The worst call obviously came from none other than Katy Huberty of Morgan Stanley. She continues to impress with her estimates. Katy Huberty estimated unit sales of 2.020 million Macs, missing estimates by a full 269,000 Macs! If I were running things at Morgan Stanley, I would consider firing Ms. Huberty. That's a recommendation. Finally, it's intersting to note that Morgan Stanley made the worst call in four out of the six categories and Bullish Cross made the best call in four out of the six categories.
Disclosure: I own long term 2009 and 2010 call options in Apple. The information contained in this blog is not to be taken as either an investment or trading recommendation, and serious traders or investors should consult with their own professional financial advisors before acting on any thoughts expressed in this publication.
READ THE FULL ARTICLE AT:
http://bullcross.blogspot.com/2008/0...estimates.html
If any of you guys are interested in working on this in our wiki system, which is available but not live, let me know and I'll point you to it.
Best,
K
Kasper, what is the address of the AI wiki? Has anyone started on this?
If any of you guys are interested in working on this in our wiki system, which is available but not live, let me know and I'll point you to it.
Best,
K
I would be interested in this. Just e-mail me or send me a message.
Andy Zaky