Wall Street pleased by Apple's surprising Sept. quarter, anticipates huge holiday sales
Apple beat Wall Street expectations and left analysts satisfied with its September quarter, though market watchers are already more focused on anticipated blockbuster sales of new iPhone and iPad models in the current holiday quarter.
The stronger-than-expected September quarter was led by record iPhone sales of 33.8 million for the three-month period, earning the company $7.5 billion in profit on revenues of $37.5 billion. After Apple announced its results, Wall Street analysts provided their reactions, and a summary of those thoughts follows.
Huberty was also encouraged by what she interpreted as a "bullish" tone from Apple's management during their quarterly earnings conference call on Monday.
"Whereas two quarters ago Apple CEO Tim Cook set the tone by acknowledging Apple had not delivered on everyone's expectations, yesterday's call focused on confidence in the future including a strong holiday season," she wrote. "Management continues to highlight innovation both in current and new product categories, examples of which could include iWatch and iTV."
Moskowitz noted that Apple guided revenue of between $55 billion and $58 billion for the December quarter, with gross margins of between 36.5 percent and 37.5 percent. Those numbers are slightly higher than previous consensus estimates of $55.5 billion in revenue and margins at 37 percent.
"We think the stage has been set for Apple to deliver a beat-and-raise if the company can avert the prolonged supply constraints that negatively impacted last year's holiday quarter," he said.
Beyond that, he expects multiple catalysts for Apple over the next 12 to 18 months. They include a sixth-generation iPhone, expansion with China Mobile, and further geographic expansion.
As for Apple's much-anticipated new product categories, which the company is expected to enter in 2014, Whitmore expects that a television or wearable devices could be in the company's pipeline. Such products "should alleviate innovation concerns," he said.
Blended average selling prices of both the iPhone (at $577 last quarter) and iPad ($439) are showing signs of stabilization, he said. He expects that Apple's margins could begin to grow through fiscal year 2014 with strong sales of the iPhone 5s and iPhone 5c.
Daryanani also noted that the mid-point of Apple's guidance for the December quarter implies about 4 percent year over year growth. If the company is able to grow both the iPad and Mac lineup during the holiday season, he expects that Apple will report revenues that exceed the mid-point of its guidance.
"The December guide suggests the business has stabilized," he said. "The bigger picture moving forward is calibrating the fade of the iPhone 5s in March 2014 and the timing around additional product launches."
For next year, Munster expects Apple to release a larger-screened iPhone, a smart watch accessory, and the analyst is still holding out hope for a full-fledged television set from the company.
He, too, views Apple's guidance for the December quarter as conservative, as his own projection calls for the company to bring in revenue of $58.9 billion for the three-month period -- ahead of Apple's high-side $58 billion outlook.
Marshall has increased his calendar year 2013 estimate to $174.1 billion in revenue and $39.96 billion in profit. He sees the company selling 156.6 million iPhones and 73.2 million iPads, with product margins at 37.2 percent.
He's also anticipating the launch of a TD-LTE iPhone on the network of China Mobile, the world's largest wireless operator. That launch could help bolster Apple's March 2014 quarter, and offset some of the post-holiday seasonal trends in Western markets, he believes.
"Shares of Apple ended up essentially flat in aftermarket response to the upside result, and we would expect sentiment to continue to be caught in a tug of war between encouraging indications that growth and margins are turning the corner and ongoing concerns about a lack of business model expansion, the speed of product cycles, and Android market share and cost advantages," Gauna wrote.
The stronger-than-expected September quarter was led by record iPhone sales of 33.8 million for the three-month period, earning the company $7.5 billion in profit on revenues of $37.5 billion. After Apple announced its results, Wall Street analysts provided their reactions, and a summary of those thoughts follows.
Morgan Stanley
Apple's revenue growth trajectory is surprising to the upside, analyst Katy Huberty said. She has adjusted her estimates and now models for Apple to grow revenue 7.5 percent in calendar year 2014, up from her previous prediction of 6 percent.Huberty was also encouraged by what she interpreted as a "bullish" tone from Apple's management during their quarterly earnings conference call on Monday.
"Whereas two quarters ago Apple CEO Tim Cook set the tone by acknowledging Apple had not delivered on everyone's expectations, yesterday's call focused on confidence in the future including a strong holiday season," she wrote. "Management continues to highlight innovation both in current and new product categories, examples of which could include iWatch and iTV."
J.P.Morgan
Analyst Mark Moskowitz recommends that investors take advantage of any near-term losses in Apple's share price. He expects AAPL to "find firmer ground in the coming days," following a strong September quarter and with expectations of a huge holiday.Moskowitz noted that Apple guided revenue of between $55 billion and $58 billion for the December quarter, with gross margins of between 36.5 percent and 37.5 percent. Those numbers are slightly higher than previous consensus estimates of $55.5 billion in revenue and margins at 37 percent.
"We think the stage has been set for Apple to deliver a beat-and-raise if the company can avert the prolonged supply constraints that negatively impacted last year's holiday quarter," he said.
Deutsche Bank
Apple's product cycles are now kicking into gear, analyst Chris Whitmore said. He expects strong holiday demand for the company's new products, and suspects that its guidance for the December quarter will prove conservative.Beyond that, he expects multiple catalysts for Apple over the next 12 to 18 months. They include a sixth-generation iPhone, expansion with China Mobile, and further geographic expansion.
As for Apple's much-anticipated new product categories, which the company is expected to enter in 2014, Whitmore expects that a television or wearable devices could be in the company's pipeline. Such products "should alleviate innovation concerns," he said.
RBC Capital Markets
Apple is "executing impressively" at the moment, in the eyes of analyst Amit Daryanani. He sees an iPhone deal with China Mobile, the upcoming launch of the iPad Air and Retina iPad mini, and a potential increase in capital allocation as short-term catalysts for the company.Blended average selling prices of both the iPhone (at $577 last quarter) and iPad ($439) are showing signs of stabilization, he said. He expects that Apple's margins could begin to grow through fiscal year 2014 with strong sales of the iPhone 5s and iPhone 5c.
Daryanani also noted that the mid-point of Apple's guidance for the December quarter implies about 4 percent year over year growth. If the company is able to grow both the iPad and Mac lineup during the holiday season, he expects that Apple will report revenues that exceed the mid-point of its guidance.
Piper Jaffray
Analyst Gene Munster is encouraged by the guidance Apple provided for the December quarter, which came in ahead of his expectations on the revenue side. He expects earnings to be essentially flat year over year for the holidays, before trending upward 8 percent in the March 2014 quarter."The December guide suggests the business has stabilized," he said. "The bigger picture moving forward is calibrating the fade of the iPhone 5s in March 2014 and the timing around additional product launches."
For next year, Munster expects Apple to release a larger-screened iPhone, a smart watch accessory, and the analyst is still holding out hope for a full-fledged television set from the company.
Cantor Fitzgerald
Analyst Brian White believes Apple has upside potential to his price target of $777, nearly $250 higher than the company's current share price.He, too, views Apple's guidance for the December quarter as conservative, as his own projection calls for the company to bring in revenue of $58.9 billion for the three-month period -- ahead of Apple's high-side $58 billion outlook.
ISI Group
Apple is protecting its strong ecosystem from threats like Google's Android with free software, analyst Brian Marshall believes. The company announced last week that future OS X, iWork and iLife updates will continue to be free for Apple customers.Marshall has increased his calendar year 2013 estimate to $174.1 billion in revenue and $39.96 billion in profit. He sees the company selling 156.6 million iPhones and 73.2 million iPads, with product margins at 37.2 percent.
Canaccord Genuity
A "favorable" mix of iPhone and iPad units should result in stronger average selling prices and margins for the holiday quarter than market consensus expects, according to analyst Michael Walkley.He's also anticipating the launch of a TD-LTE iPhone on the network of China Mobile, the world's largest wireless operator. That launch could help bolster Apple's March 2014 quarter, and offset some of the post-holiday seasonal trends in Western markets, he believes.
JMP Securities
Longtime Apple bear Alex Gauna was encouraged by stronger-than-expected iPhone sales, as well as gross margin stabilization at 37 percent. He remains "fundamentally neutral" on the company, however, citing the fact that domestic cash fell by $5 billion and he doesn't see "enough innovation" in the iPhone 5s or new iPads to cause consumer excitement."Shares of Apple ended up essentially flat in aftermarket response to the upside result, and we would expect sentiment to continue to be caught in a tug of war between encouraging indications that growth and margins are turning the corner and ongoing concerns about a lack of business model expansion, the speed of product cycles, and Android market share and cost advantages," Gauna wrote.
Comments
As long as the MMs are making tons on weekly options and crushing weekly option gamblers, things are fine
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They're really showing their pleasure this morning.
As long as the MMs are making tons on weekly options and crushing weekly option gamblers, things are fine
" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" /> 
If you can't beat 'em, join 'em. I made out pretty well selling covered calls against my position this week.
Who is 'everyone'? Certainly not Apple. So instead of stating they were wrong, analysts are still pushing their wild guesstimates and blame Apple for them.
Now, just two minutes later, it's down $0.88.
Then why has the stock gone down?
Because...
Meanwhile, the stock is jumping around, as I write this it's down about $3.50, after having been up over $8 earlier.
Now, just two minutes later, it's down $0.88.
Everyone's confused.
They need guidance from Gene Munster.
Because...
Mom!? Is that you??
lol
Correction:
"Wall Street Fatties pleased by Apple's surprising Sept. quarter, anticipates huge holiday sales"
http://www.gizmodo.in/news/No-Apples-Not-Trying-to-Bust-Your-Phone/articleshow/24885274.cms
How pathetic and embarrassing the NY Times would run something like this. And why call out Apple only for this? Does anyone think a 3 year old Samsung phone is going to run as well as the S4 does? And if it does its most likely because its still running old android software. The sad thing is non techie people will read this and think Apple is purposely screwing them over. :rolleyes:
Reminds me a bit of the Reuters story last holiday season where they went after what they called the Apple tax - the accessories and apps you buy for iOS devices. Of course none of those things are a tax, but Reuters wanted you to think it was some evil trap from Apple locking you in to a system that was constantly forcing you to spend money. :rolleyes:
Meh. To me, News like this isn't about Apple -- it really should read; "Apple stock goes up because options were not profitable betting against the value of the stock by market makers." Then you will see "stock goes down despite higher performance than predicted" and that should translate to; "Chumps who thought stock price is based on reason took a bath."
The Times also ran the false and misleading Mike Daisy exposé on Apple in China. So I am not surprised at all.
Morgan Stanley: "Whereas two quarters ago Apple CEO Tim Cook set the tone by acknowledging Apple had not delivered on everyone's expectations..."
Who is 'everyone'? Certainly not Apple. So instead of stating they were wrong, analysts are still pushing their wild guesstimates and blame Apple for them.
Analysts are people who make money getting market activity, and acting in hind sight as if anything was even loosely based on reality and not market price manipulations. Seriously, who hasn't figured this out yet and why? Perhaps highly paid smart people have analysis that generates money.... rather than accurate predictions.
Tim Cook saying something has about as much influence on Tea Leaves being read for stock performance.
Funny, the only articles I’ve seen so far on news websites are the typical gloom and doom for Apple screeds. Like this headline from CBS News…
ERIK SHERMAN /
MONEYWATCH/ October 28, 2013, 5:30 PMApple’s strong earnings growth masks iPhone worry
The article then goes on to explain why Apple is doomed anyway, even with strong sales.
That’s the sort of stuff I’m seeing, not these “pleased” analysts.
And as for the “low information” population (as Rush Limbaugh describes them) I’m already hearing from some that “Apple is in financial trouble.” One even explained to me that the iPhone 5C is no good because it will warp if you put it in your pocket. “It has a plastic screen,” he lamented. How do you deal with that kind of ignorance? Apparently the paid trolls are getting the job done.
The Times also ran the false and misleading Mike Daisy exposé on Apple in China. So I am not surprised at all.
Is the NYT competing now with Forbes for making every issue about Apple?
If there is a study about "computers" affecting ADD -- you can predict that it will be "Apple causes ADD*"
In small print; *'other computers may be involved.'
Apple, and three thousand other electronics manufacturers, build equipment in China. And which company pushed for better working conditions and higher pay about 5 years before the story? Apple. No Forbes articles about that.
**** Wallstreet.
This needs to be redacted or corrected. Wall street was happy that they had higher revenue then expected even though it was still down from last year (which net net is still not making them happy). They are also not happy about the smaller gross margin (even though Tim Cook advised why it was smaller as a deferred revenue for tax saving). They are also unhappy about Tim Cook's comment about iPad mini supply may not be able to meet holiday demand.
They paid no attention to new products in '14. Secondly I can't remember how many quarters its been when Apple has beat expectations to see their stock decline the following day.
Overall they were pleased about a small few things and disappointed by a larger amount of things.