Last quarter AAPL ONLY modestly beat their guidance and fell short of the consensus, the latter of which had the traditional spread over guidance to compensate for historical management guidance sandbagging. This Q AAPL will blow the guidance and shorts to smithereens. Why? Read on
Revenues, earnings and cash flow will crush guidance and estimates.
iPhone 5 and Gross Margin
GUIDANCE DID NOT INCLUDE IPHONE 5 which has huge implications for revenues (at least $3.5B higher) and margin which is likely likely to come in stronger than last Q of 43%. The phone mix and % of total revs will amply offset the lower priced tabs in the mix this quarter on margin -- the gross margin guidance was for only 38.5% --we think it will push above 45%.
Pad ASP/Volume Mix
Yesterday the shorts all whet themselves over the amorphous Cooke comments re passing the 100m iPads sold mark. YAWN! The quality analysts are split on whether this was intended as an offhand BFD haircut to published analyst estimates or even less significant, but even if the channel inventory adjustments to prepare for the two new iPads announced yesterday does result in pads coming in a couple m short of analyst consensus of ~18m, the 2m units are at lesser margins than the phones. That said, Cooke emphasized several times on the 2Q conference call that they did not even begin shipping the "New iPad" (with its stronger margin) to China until the third Friday in July. We think that piece is more significant than the channel effects they noted on that call and his offhand comments yesterday.
iPhone Sales through U.S. Carriers
Last Q AAPL sold a total of 26m iPhones. The consensus estimate for 3Q is 27m phones, or a mere 4% increase over Q2 after the haircuts for the "only 5m" iPhone 5 sales in the last weekend of Sep. But wait... ATT sold 4.7M iPhones in Q3, up 27% (!!!) over Q2. VZ got an allocation of only 650k I5 phones but still sold 3.1m iPhones in Q3, up 15% for the quarter. If those two companies are a proxy, they are up a blended 22%, WAY HIGHER than 4% in the street estimate consensus. With Asia and the new carriers incl Sprint and globally coming up the curve through the quarter, we think it is now likely AAPL may have sold closer to 30m phones in the Q vs the implied ~flat to 2Q total of 26m in the company's guidance.
Cloud, New MacBooks, Air, iTV, iMacs, New iPods
Read the 2Q call transcript -- all of these will be at least the same and likely higher this quarter as back to school sales set in. Cloud services are booming now.
Revs are guided to $34B and the latest consensus is for $36B. We look for AT LEAST $37B, and it could be well on top of that based on the ATT and Verizon phone results.
EPS guidance was for $7.65 and the revised consensus is now for $ 8.82. We see EPS of at least $9, and they may top $10 on the margin and phone rev strength.
Last Thursaday we put out a piece (summarized on the FB board titled "Zuck on Mobile") suggesting FB was way oversold and going to tear higher on the update. FIO is next tonight... AAPL's turn to smash the numbers and crank the shares is tomorrow's story.
To much of a gamble, I know Jan numbers will crush, but I would hate to load up here and any disappointment tomorrow would take AAPL down to the 500s. Too much of a risk for me, can't afford the beating if they do miss a little,
I just bought rht- they are teaming up with IBM to push a total corporate product-and yes, active x-which will be java driven so you can use MS servers but the OS will be free... I see this as a much more viable solution than Apple overpriced products. Good luck gambling.