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Apple Inc. Message Board

  • dtmccune3 dtmccune3 Apr 23, 2013 10:45 PM Flag

    Gross margin hysteria

    I completely understand the importance of gross margins...any apple bull would rather have them increasing...but the street has gone mad...for example gms next quarter are forecast to be about 1.5% lower next Q which combined with their rev guidance of 33.5-35.5B translates into .5B...sounds like a lot, but that is just a little over $.50/share in stock price. You can argue that aapl stock should have never gotten to $700/share, but out of the almost $300B that apple has lost in market cap the slow down in growth and decline in margins is more than factored in...

    You can also argue that this past Q and coming Q is seasonably weak anyway...along with strategic decision to do iPad mini which carry lower margins...also can argue that next iPhone will have better margins than iPhone 5 since it will supposedly be using same form factor...

    Bottom line...I think the weaker gms and revs are factored in.....but the massive buyback is not....and neither are the "new product categories"...

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    • aapl is going the same predictable path as MSFT and INTC. Great companies, no longer great growth companies, with a flat stock performance year after year. Not fair or rational necessarily, just market psychology. Apple's margin on the entry level iPhone is 20% lower than the flagship and it's going to cannibalize sales and start shrinking the margin, which is the real support for the premium price. Huge margins and huge growth are simply no longer the future. It's impossible to exaggerate how important Jobs was to Apple.

    • Take a look at GOOF after they reported...went up AH and then opened flat, only to gain 35 points the next day.
      Those strikes at 430 stopped this today.
      I agree that AAPL has far too many irons in the fire that they won't dazzle in the near future.
      Remember, the market is always forward looking.
      When product invites go out in May for June product unveil, there are so many things that AAPL might reveal which could easily catapult share price 10%+.
      Ignore the noise.
      Those calling for 318 don't have the money to buy one share.

      • 1 Reply to nofaithincook
      • They better do a lot better than the incremental changes since 2007 to the iPhone. While they made evolutionary changes the market caught, then gained on them. There are many phones, many, far superior to the iPhone - and less expensive. The reality is quite shocking, when perception catches up to how dated and stale the iPhone is it could get ugly. I don't own aapl stock but own a lot of other tech. I used to think aapl was the greatest company in business history, but not since Mr. Jobs passed away.

    • Income from operations down 20% next qtr already guided down.... get the !@#$% out.

      • 1 Reply to gigabyte426
      • Revenue guidance, as someone said, not income. Also, AAPL is going back to its old strategy (under Jobs) of conservative guidance that they can beat easily. Tim Cook has realized that he had overestimated the size of his brain, contains zero 'strategic thinking' matter. However, AAPL even with reduced guidannce is undervalued by at least $100. But it is the most prolific options play on a weekly basis and the pigs, otherwise known as speculators, know they cannot make money any other way so they collude each week to play AAPL to their advantage. Meanwhile, the retail investor is too scared to invest. Will likely trade sideways until the next earnings announcement, but clearly have ceded advantage to Samdung in the next quarter (with their Galaxy 4).

        Sentiment: Buy

    • Revenue guidance

      A range of $33.5 to $35.5 billion has a midpoint of $34.5 billion. Market consensus was for $39.34 billion, so any of these levels represents a significant miss. At $33.5 billion, revenues would be almost 15% below expectations; at the midpoint, they'd be 12.3% below expectations; and at the high of the range ($35.5 billion), they'd be 9.8% below expectations. Any of these implies quite a significant downward revision.

      Not only that, but the June 2012 quarter saw revenues of $35 billion, so the midpoint of the range actually implies revenues will drop in this quarter. And in any case, this guidance means Apple won't see any revenue growth.

      Earnings guidance

      Obviously, such a revenue miss could not come without consequences. Taking into account the rest of the guidance items, this is what we can come up with for the top and bottom of the gross margin guidance at the 3 possible levels for revenues ($33.5 billion, $34.5 billion, $35.5 billion):

      As we can see, the guidance implies EPS between $6.62 and $7.46. This compares to the existing consensus of $9.08. Apple is thus guiding down between 18% and 27%. There will have to be a flurry of downside revisions. Again, even the high point of guidance, $7.46, comes in below last year's $9.32 for the same quarter. This thus implies an earnings contraction of 20% to 29%.

 
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