October 2010
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Day October 21, 2010

Estimates for Apple's first quarter earnings (January)

Oppenheimer on the concall:

We expect revenue to be about $23 billion compared to $15.7 billion in the December quarter last year. We expect gross margins to be about 36%. We expect OpEx to be about $2.325 billion.

We expect OI&E to be about $65 million. And we expect the tax rate to be about 25.5%. We’re targeting EPS of about $4.80.

Here are my expectations:

63 percent of iPhones were sold outside the US in Q3

[AT&T] activated 5.2 million iPhones in the wake of the iPhone 4 launch, or about a 62.5 percent leap over an already record spring

via AT&T blows past records, activates 5.2m iPhones in summer | Electronista.

This means 63% of iPhones sold outside the US last quarter.  This is down from about 70% earlier this year. As it was a launch quarter and distribution was much more constrained outside the US, the lower figure is not surprising.

It’s still important to note however that sales outside the US are far larger than in the US but penetration and share is far less.

Analysts predict iPad sales (part IV)

So far Apple has sold 7.458 million iPads and there is still a quarter remaining in the calendar year. The highest forecast immediately after the launch of the product was 7 million.

For the record, in January I forecast 6 million units for calendar 2010 (and 10 million in first 12 months of sales).

All analysts polled grossly underestimated the iPad. My impression is that competitors are still in denial.

Deagol: Fiscal 4Q '10 actual results vs. estimates

Comprehensive and thoughtful review of the performance of the analyst cohorts in predicting Apple’s quarter:

Deagol’s AAPL Model: Fiscal 4Q ’10 actual results vs. estimates.

By Daniel Tello’s ranking I was first in Q2 but 8th (out of 38) in Q3. Overall, bloggers beat Pros but by a lower margin than in the past.

I have been ok at estimating product line performance and top line sales but not so good in guessing margins. Last quarter I went for a high iPhone number (13 million vs 14.1 actual and 11.39 Pro/12.07 Blogger consensus) and middle-of-pack on iPads (5 million vs. 4.2 actual and 4.79 Pro/5.52 Blogger consensus). The total iOS units I forecast was 18 million and Apple sold 18.3 so I was fine on units and pricing.

My guess on the cause of my estimate failure on margins was iPhone 4 rollout ramp. I had to take iPhone margin down to below 50% (about 49%) to make the reported total GM. iPhone has been, on average, running at 52% over the life of the product.

PED’s rankings are here.

Turning up the volume: iPhone overtakes iPod

Another chart that speaks for itself. The iPod has been quite resilient as a product line but with both the iPhone and iPad embedding an iPod, cannibalization is happening.

The iPhone is now the new volume leader among Apple’s devices.

AT&T does not pay a higher price for iPhone exclusivity

In last year’s third calendar quarter earnings call (October 20, 2009) Tim Cook was asked:

“So when you go from exclusive to multiple, you don’t change the charge to the carrier?”

Cook answered: “Correct.”

In this year’s third calendar quarter earnings call (October 18, 2010) Tim Cook was asked again whether the future iPhone non-exclusive subsidy will affect the iPhone revenues and again Tim Cook repeated that it won’t.

Chris Whitmore – Deutsche Bank

And what is your experience then when you’ve gone non-exclusive from a subsidy and margin standpoint on the phone, have you had to give anything up in the past?