Tuesday, October 18, 2011

Apple Guides Above Street Consensus

Though the stock is trading down some 5% in after hours due to a rare earnings miss from Apple (AAPL), anybody with a half full mindset will see a more bullish stance after hearing the conference call.

iPhone sales were very disappointing at only 17M which was below consensus closer to 20M. Here is where the debate begins. AAPL has already reported the strongest launch of a new iPhone model at over 4M for the first weekend. The CFO made it clear that demand waned as rumors began circulating that AAPL would release the iPhone5 in September or October. Why buy a 4 when the price will drop after the release of the newest model?

So bears can fret over the weak Q4 numbers and bulls can relish that the going forward numbers will remain strong. Actually, it's hard to understand the bear case considering the past of AAPL. The iPhone4S had a monster launch so isn't it without a doubt that the new model launch caused the problem?

Oh well, the market doesn't work that way. Bears like to press shorts where any doubts exist. They'll press the fact that Jobs death is the new factor and the future numbers just can't be assumed. Ultimately investors looking beyond a few hours will focus on AAPL guiding above consensus for the first time in years. Not to mention that the stock trades below a EV of 10x earnings. One would think shorts would be scared to short such a cheap cash generator.

Just don't count on a company with a record launch at the start of the year end quarter heading for any long term declines. Any significant dips should be used as an opportunity to load up on the premier US company.


Per AAPL PR:


  • posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. 
  • Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.
  • sold 17.07 million iPhones in the quarter, representing 21 percent unit growth over the year-ago quarter. 
  • sold 11.12 million iPads during the quarter, a 166 percent unit increase over the year-ago quarter. 
  • sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. 
  • sold 6.62 million iPods, a 27 percent unit decline from the year-ago quarter.     
  • “We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter,” said Peter Oppenheimer, Apple’s CFO. 
  • “Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30.”     


Disclosure: Long AAPL. Please review the disclaimer page fore more details.





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