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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.

  • Mbonny

    Where is the IPod touch!

    If they sold 14.1 m iPhones & 4.2 m iPads and the total of iOs Devices is 18.3 it will implie that apple sold 0 iPod touch !

    Did I missed anything?

    • asymco

      Sorry, I meant iPad + iPhone iOS. The iPod touch number is unknown but I estimate it at 4.5 million. Jobs said 19 million Facetime devices shipped so far so that roughly matches.

  • Stu

    I've been wondering, and may post on AFB, about the influence/effect the non-professional analysts had on AAPL's results.

    If you took the average of the professional analysts, Apple's numbers would have looked spectacular.
    However, given that the non-professional analysts numbers were significantly higher, the whisper EPS & production numbers were also much higher. Everywhere, the non-pro analysts were very accurate, with the glaring exception of iPads. Because of this, the stock tanked after earnings release.

    I believe that if the non-pro analysts weren't so widely published at places like Fortune, and even AFB, that the professional analysts would not have used the non-pro numbers as a cheat sheet for the whisper numbers. This would have made the earnings look great relative to the pro's numbers. Instead, the stock got hammered, because of one miss (and maybe GM).
    Perhaps the non-pros, while trying to help their fellow investors, are helping too much (or at least too many), and actually hurting them instead.
    And, obviously, the pro's are not doing real homework. But that's always been the case.

    (Reposted from an earlier article)

  • Marcos El Malo

    It's a common practice to "buy on the rumor, sell on the news", so the drop in share price post announcement should come as no surprise. It happens all the time with Apple and many other companies. If the fundamentals are sound, the stock will come back and the sell off will only be a blip.

    "Perhaps the non-pros, while trying to help their fellow investors, are helping too much (or at least too many), and actually hurting them instead."

    I don't think it should be anyone's job to make their predictions merely to pump a stock, if this is what you're suggesting. (If it is what you meant, and I were Horace, I'd be insulted. Pistols at dawn, you knave!) I believe that Horace and others are providing a service to all investors by giving the best analysis they can, regardless of whether it may hurt or help share price.

    Furthermore, I think it is assuming a lot to say that a short term drop in share price hurts investors. It presents a buying opportunity for some. The only people such a blip hurts are those who were planning on cashing out short term and traders caught on the wrong end of a bet. Assuming it's a blip, of course. (It might also cause anxiety to those new investors that are in the habit of checking stock prices many times throughout the day, but otoh, it helps them develop intestinal fortitude, and might get them to use their time more productively, maybe on fantasy sports teams, for example.)

    • Stu

      You're missing my point.

      The non-pro's are just trying to help out other non-pros. But the pros are using their more accurate estimates as crib sheets for the whisper numbers. When they're not met perfectly, the pros drop the stock.

      If the non-pro's numbers did not exist this past earnings, Apple would have been the blowout of all blowouts. That's how far off the pro's were before the non-pros came out with their numbers. Heck, analysts were upping their iPhone numbers by several million units the week before earnings.

      It just seems to me that by posting the numbers someplace like Fortune that the non-pros are playing into the pros hands, and hurting themselves.

      • Marcos El Malo

        Then you're not explaining your point very well, I'm afraid. Granted, I could just be dense. I'm not even sure now who you mean by pros and non-pros. And how are the non-pros hurting themselves? Hector is hurting himself by publishing his estimates and analysis? See? I'm all muddled. Please clarify, if you can.

  • Mark Newton

    To me, this just proves the so-called ‘pros’ simply don’t understand Apple. These are the same ‘pros’ who are demanding Apple pay dividends or buy back stock.

    Steve Jobs isn’t just disrupting music, telcos and techs. He refuses to play by Wall St’s rules, yet the stock is creaming those who do.

  • KRIS

    Got to love Horace. Apple drives the competition crazy.

  • sweeps

    @Stu, in my opinion, one can look at Apple’s actual earnings over a given period of time (ie, since the iPhone was released) and conclude that it’s a worthy (long term) investment.  

    “If the non-pro’s numbers did not exist this past earnings, Apple would have been the blowout of all blowouts.”

    The numbers speak for themselves.  For longer termed investors, there’s no need for Apple’s numbers to be perceived as the blowout of all blowouts.  In time, the valuation adjusts.  For shorter term traders, the story is different, and timing trades becomes more critical.

    “It just seems to me that by posting the numbers someplace like Fortune that the non-pros are playing into the pros hands, and hurting themselves.”

    I disagree.  This statement doesn’t make much sense to me.  I don’t get this level of insight and understanding from the pros.  I’m quite thankful for the community of non-pros, particularly Horace and Asymco.  My knowledge and understanding of the industry has grown, and I don’t want to discourage them in any way.  Simply stated, the non-pros provide a huge service to us individual investors.