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Post by prazan on Jan 25, 2013 12:54:04 GMT -8
I'm trying to get my head around the non-guidance. Here are the numbers I've come up with, beginning here with sales by product line.
Q2E 2013 PRODUCT UNITS REVENUES IPHONE 34,500 22,080 IPAD 20,570 9,182 MAC 4,050 5,427 IPOD 6,847 1,082 ITUNES 3,820 ACCESSORIES 1,400 TOTALS 42,990
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Post by prazan on Jan 25, 2013 13:01:45 GMT -8
Q2 ESTIMATE BASED ON APPLE GUIDANCE
Assumes high range of guidance: $43B in revenues, 38.5% GM
COGS: 26,439 GROSS MARGIN: 16,551 GM%: 38.5% OPEX: 3,850 OPINC: 12,701 O I/E: 350 PRETAX: 13,051 TAX: 3,393 NET INC: 9,658 SHARES: 947K EPS: $10.20
The EPS is higher than the high end of Mav's estimated range, so I welcome the board to look at the numbers and point out any miscalculations.
The product line sales estimates in the previous post were used to hit the gross revenue number, and are subject to revision. But it's hard to hit $43 billion with YoY growth in iPhones, and continued growth in iPads.
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Mav
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Post by Mav on Jan 25, 2013 13:02:31 GMT -8
Actually, it isn't. The range tops out at $10.25 if I did the math right. $9.75 is the midpoint.
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Post by Deleted on Jan 25, 2013 14:26:03 GMT -8
Yes it seems $10.25c is the high end of guidance.
So we are looking at a $2 drop in TTM if we hit that number.
For comparison, if we left all other figures the same, but used last years freakish GM%, we would see EPS above $13.50c on the same revenue.
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Post by Deleted on Jan 25, 2013 16:39:10 GMT -8
And I calculate minimum guidance figures at about $9.30 EPS
So how are we treating this new guidance metric in relation to the old one?
If it hadn't changed its guidance method, what would apple have given for EPS?
A) $9.30c (new guidance minimum) B) $10.25c (new guidance maximum) C) $9.82c (new guidance mid-point)
Or D) lower than anywhere in the new guidance range
If apple beats their guidance by the same 17.5% as last quarter:
A) $10.92c - using minimum guidance B) $12.04c - using maximum guidance C) $11.54c - using mid-point guidance
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Post by Deleted on Jan 25, 2013 16:42:27 GMT -8
I think a actual EPS result between $10.92- $12.04 with stong Q3 guidance would be a good result in 3 months time.
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Mav
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Post by Mav on Jan 25, 2013 17:31:34 GMT -8
We really, really have to stop thinking in terms of "beat percentages". I'm not saying don't use them as a check - just don't use them as a _crutch_.
We currently don't know how Oppenheimer intends for these ranges to work. At the very least you have to assume there's been a shift in conservatism.
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Post by prazan on Jan 25, 2013 18:29:41 GMT -8
I think a actual EPS result between $10.92- $12.04 with stong Q3 guidance would be a good result in 3 months time. Your posts this week have been spot on, particularly the ones about international pricing, and also your thinking on guidance posted in this thread. I don't mind so much that Apple has shifted to non-guidance guidance, given that Apple already reports more than many other companies. I do question their timing, however. I wonder whether they're tone deaf. It certainly added uncertainty to an uncertain time in the history of the company's financial performance. It helps me sometimes to try to put myself inside the head of those facing a specific problem. One of the first questions any narrative must address is why now, so I'm prodded to ask, why this shift now? I suspect that management realizes that $12.30 is a tough hurdle this year, given the 47% GM from a year ago. The guidance range might be an attempt to steer WS analysts to a lower target that Apple can beat. I see management lighting a neon arrow at $10.25, the top of the range, signaling that the more aggressive analysts should set their estimates at that mark.
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Post by Mav on Jan 25, 2013 18:36:17 GMT -8
prazan, guidance isn't much different in FORM than the range guidance Apple's given now and then (particularly in 2008-09 or something like that). As you know, EPS is easy to calculate for a given share count (curious, that). INTENT is the Rubik's cube.
Apple did NOT anticipate 439.x close, trust me on this one. They couldn't have known that changing guidance (or not?) would do this to the stock. So to call 'em tone deaf for _that_ isn't fair.
What IS fair is to criticize the dodginess elements of the CC, of which there were several. And that really crappy-looking guidance.
As for GM, building for the future obviously causes pain to AAPL longs. The going concern part should be no concern to us. Now, it's just share price.
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Post by appledoc on Jan 25, 2013 18:55:08 GMT -8
And I calculate minimum guidance figures at about $9.30 EPS So how are we treating this new guidance metric in relation to the old one? If it hadn't changed its guidance method, what would apple have given for EPS? A) $9.30c (new guidance minimum) B) $10.25c (new guidance maximum) C) $9.82c (new guidance mid-point) Or D) lower than anywhere in the new guidance range I choose door A.
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Post by prazan on Jan 25, 2013 18:56:21 GMT -8
I usually assume management is smart enough to think through the ramifications of policy changes. So it would surprise me if they didn't examine how analysts and the market would react.
Do you have any ideas regarding why their performance in the cc was so lackluster? Were they feeling pressured and stress affected their reactions? Are they holding something back that's so big that they didn't care so much about results this quarter? In the intraday several members were railing against management's arrogance. TC doesn't seem arrogant to me so something else was going on. A rubrik cube, indeed.
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Post by Deleted on Jan 25, 2013 19:06:52 GMT -8
We really, really have to stop thinking in terms of "beat percentages". I'm not saying don't use them as a check - just don't use them as a _crutch_. We currently don't know how Oppenheimer intends for these ranges to work. At the very least you have to assume there's been a shift in conservatism. Thats the big question that hasn't been answered - Does the old sandbagged guidance fall into this new range anywhere or not? I have no idea either way, partly because of the ranges given - the GM% range is rediculously tiny Lets look at GM%: In the past 8 quarters, the average beat on GM% was 3%. The smallest difference between apples Guidance and an actual apple result is 1.3% Applying that to guidance minimum of 37.5% would take us to 38.8% - which is above the maximum guidance for GM%. Even if we assume the minimum beat apple had (1.3%) was the sandbag, and that has been removed - then apple would still have had an average beat (less the 1.3% sandbag) of 1.7%. Applying the average GM% beat of to 37.5% would take us to 39.2%. I still think apple is sandbagging on GM%, and its safe to use 38.5% as a floor and perhaps expect a beat on that. Lets look at Revenue: The smallest apple beat in the last 8 quarters was $1 billion. The average beat was 13% over the last 8 quarters, but the recent trend has been 5% beats. Applying the $1 billion minimum beat / or the recent 5% beat to the minimum rev guidance of $41 billion takes us to $42-$43 billion - which is smack in the upper half of the guidance range. So on one hand I think GM% is STILL SANDBAGGED and it would be a bad result if we came any lower than 38.5% But on the other hand I think Revenue range is LEGIT and a $42-$43 billion range would be a likely range. Tax rates? I have no idea - why did we go up to up from 24.5% in Q4 to 26% last quarter? higher US mix of sales? - no US share of sales dropped last quarter. any ideas? I would think that tax rate guidance is maximum, and we will likely come in under.
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Post by Mav on Jan 25, 2013 19:12:13 GMT -8
And I calculate minimum guidance figures at about $9.30 EPS So how are we treating this new guidance metric in relation to the old one? If it hadn't changed its guidance method, what would apple have given for EPS? A) $9.30c (new guidance minimum) B) $10.25c (new guidance maximum) C) $9.82c (new guidance mid-point) Or D) lower than anywhere in the new guidance range I choose door A. burgess - I presume the variance in EPS is just due to your share count assumptions? Oppenheimer Code, Part 55: "Back then, we gave guidance we thought we could reasonably achieve." "Now, we give a range of guidance that we're likely to report within." An optimist says, that's the same damn difference, just with 200% More Fudgeâ„¢. The literalist/pessimist says, $43B revs and $10.25 EPS (or so, depends on share count) represents the best we can possibly hope for. Of course, I say there's more than one choice. Where along the spectrum do you fall? (Still trying to figure it out for myself.)
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Post by Mav on Jan 25, 2013 19:19:17 GMT -8
I usually assume management is smart enough to think through the ramifications of policy changes. So it would surprise me if they didn't examine how analysts and the market would react. Do you have any ideas regarding why their performance in the cc was so lackluster? Were they feeling pressured and stress affected their reactions? Are they holding something back that's so big that they didn't care so much about results this quarter? In the intraday several members were railing against management's arrogance. TC doesn't seem arrogant to me so something else was going on. A rubrik cube, indeed. AAPL has NEVER had this kind of point drop...OR percent drop? And it's had some bad quarters with a very grumpy Cook and Oppenheimer. (Fiscal Q3 2012.) Look, did YOU think Apple would drop 14% or so in two days on a disappointment? Did most anyone? I didn't think so. I can sympathize with those who saw _arrogance_, but I saw more "ignorance". Of course, even a more "transparent" Apple plays it very, very close to the vest. Though the "yeah maybe we're looking at a bigger buyback" comment to Huberty may not be getting the attention it deserves. There is the question of share count, after all.
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Post by Deleted on Jan 25, 2013 21:39:30 GMT -8
burgess - I presume the variance in EPS is just due to your share count assumptions? Oppenheimer Code, Part 55: "Back then, we gave guidance we thought we could reasonably achieve." "Now, we give a range of guidance that we're likely to report within." An optimist says, that's the same damn difference, just with 200% More Fudge™. The literalist/pessimist says, $43B revs and $10.25 EPS (or so, depends on share count) represents the best we can possibly hope for. Of course, I say there's more than one choice. Where along the spectrum do you fall? (Still trying to figure it out for myself.) I think $10.25 is a bare minimum - I don't see why GM would decrease sequentially - it's going to be higher than 38.5%, but im not going to go any higher than $44 billion in revenue. $11 EPS ill stick with unless we have a CM launch.
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Post by Mav on Jan 25, 2013 21:41:08 GMT -8
I have my own opinions, but I shall reserve them for now. We're agreed on EPS though. Which actually isn't hard to do when there's underlying agreement on GM.
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Post by fas550 on Jan 26, 2013 10:11:28 GMT -8
And I calculate minimum guidance figures at about $9.30 EPS So how are we treating this new guidance metric in relation to the old one? If it hadn't changed its guidance method, what would apple have given for EPS? A) $9.30c (new guidance minimum) B) $10.25c (new guidance maximum) C) $9.82c (new guidance mid-point) Or D) lower than anywhere in the new guidance range If apple beats their guidance by the same 17.5% as last quarter: A) $10.92c - using minimum guidance B) $12.04c - using maximum guidance C) $11.54c - using mid-point guidance I have no reason to believe in any high percentage beat. Last qtr is/was the best of the year. The two previous qtrs PO basically came closer to his own guidance (the two where they missed analysts but exceeded POs own.) Perhaps PO just stated the obvious in the last CC in that guidance is no longer a sandbag (the timing sure sucked though) The facts speak for themselves in that it is. For a litany of reasons I am done believing fairy tales of future EPS growth based on the past.
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Post by rickag on Jan 26, 2013 15:13:10 GMT -8
I am taking Tim and Peter at their word. There is a reason they didn't guide EPS, why I don't know. They don't expect miraculous increase in iPhone sales YOY nor the iPad mini making up any real difference, again why I don't know.
But Tim has repeatedly said China is definitely a focus for Apple and their growth. I am taking them at their word and something will change in the second half of the year. New iPhone/iPad models? New more aggressive pricing? Even new computer models for the Asian market?
I consider this quarter toast and the market will react violently and more irrationally than we've seen yet, unless Apple increases the dividend or buybacks but I suspect they won't.
I am waiting ......
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Post by Mav on Jan 26, 2013 15:19:35 GMT -8
We've been over this several times on this thread alone. EPS is easily calculated with a given share count. That's all that's missing.
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Post by tuffett on Feb 1, 2013 12:43:11 GMT -8
Something I still haven't hammered out:
Was the low iPhone number more due to lack of international supply or lack of international demand? We were all thinking that due to the 100 country rollout supply was adequate (after the initial troubles) but was it? Did they simply roll out more countries with fewer phones to each?
I would love for this to be a supply problem but the absolutely crappy guidance has me worried that it's actually demand.
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Post by nathanstevens on Feb 1, 2013 13:30:21 GMT -8
Something I still haven't hammered out: Was the low iPhone number more due to lack of international supply or lack of international demand? We were all thinking that due to the 100 country rollout supply was adequate (after the initial troubles) but was it? Did they simply roll out more countries with fewer phones to each? I would love for this to be a supply problem but the absolutely crappy guidance has me worried that it's actually demand. I'm inclined to believe that there have been several Samsung related hiccups in the supply chain that will dry up once apple fully transitions away from them for components over the next several quarters. I also expect yields to improve and defect rates to drop as robots take over more steps in the production process.
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Post by mbeauch on Feb 1, 2013 15:28:49 GMT -8
Finished in balance, so no issue there. The problem appears to be the hold back of mini displays.
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Post by Mav on Feb 1, 2013 15:35:57 GMT -8
Or maybe demand is just that awesome.
One thing Apple NEVER seems to do is make enough of a first-gen product right away. See: iPad 1. But hey, iPad mini delays are much less of a factor now. And really, with a 1-week delay for most of the shipping timeframe in fiscal Q1, it wasn't nearly as bad as the wait for, say, the new iMacs. If you could live with waiting a few days for shipment to your door/mailbox or for Personal Pickup (which covers a giant swath of the addressable market), than you could have easily gotten an iPad mini in time for the holidays.
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Post by Deleted on Feb 1, 2013 16:10:02 GMT -8
Something I still haven't hammered out: Was the low iPhone number more due to lack of international supply or lack of international demand? We were all thinking that due to the 100 country rollout supply was adequate (after the initial troubles) but was it? Did they simply roll out more countries with fewer phones to each? I would love for this to be a supply problem but the absolutely crappy guidance has me worried that it's actually demand. It was only lower than analyst expectations by about 5%. it was 10 million higher than the year before, and had one less week in the quarter to do it, and was ramping up a new form factor (as opposed to last year when the 4S was using the existing iPhone 4 production methods.) If we can continue that same level of growth, we will be well over 60 million units next December for the 5S, with likely better margins - should be good for a $20 EPS December quarter this year.
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Post by tuffett on Feb 1, 2013 17:14:55 GMT -8
I agree it wasn't far off "expectations" but the amazing US numbers are in stark contrast to the overall. Growth was much better than we all anticipated in the US, but in total it was in line or a slight disappointment. When Verizon came out with 6.2M I was stunned and thought 50M total would be low. This is including a pretty good quarter for China. Along with the low guidance and the fact we are in production balance, I am concerned about international sales.
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Post by Mav on Feb 1, 2013 17:18:44 GMT -8
I am not terribly concerned about global growth just yet.
US is one of the markets that gets served first - and if you've done the YOY math, US activations aren't likely to grow all that much.
Greater China only got iPhone 5 recently. Let's wait about 3 months before proclaiming "international" a problem area for Apple, because not all int'l markets are created even CLOSE to equal. Greater China is now its own sales region for a good reason.
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Post by Deleted on Feb 1, 2013 18:33:14 GMT -8
With apples current iPhone business model, it will see hardly any more growth in countries with no middle class. It's why Asia Pacific growth is tanking. Luckily china has a huge growing middle class, so plenty of growth to come from there.
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Post by tuffett on Feb 2, 2013 18:58:15 GMT -8
I usually assume management is smart enough to think through the ramifications of policy changes. So it would surprise me if they didn't examine how analysts and the market would react. Do you have any ideas regarding why their performance in the cc was so lackluster? Were they feeling pressured and stress affected their reactions? Are they holding something back that's so big that they didn't care so much about results this quarter? In the intraday several members were railing against management's arrogance. TC doesn't seem arrogant to me so something else was going on. A rubrik cube, indeed. AAPL has NEVER had this kind of point drop...OR percent drop? And it's had some bad quarters with a very grumpy Cook and Oppenheimer. (Fiscal Q3 2012.) Look, did YOU think Apple would drop 14% or so in two days on a disappointment? Did most anyone? I didn't think so. I can sympathize with those who saw _arrogance_, but I saw more "ignorance". Of course, even a more "transparent" Apple plays it very, very close to the vest. Though the "yeah maybe we're looking at a bigger buyback" comment to Huberty may not be getting the attention it deserves. There is the question of share count, after all. But what is the point of being sly and dropping hints instead of saying it outright? Product secrecy is fine; secrecy about their stance on shareholder value and interests is just stupid. And if a CEO and CFO are ignorant about how tiptoeing around these issues would be perceived after this long on the job, then perhaps they should be replaced with people who aren't so dense.
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Post by Mav on Feb 2, 2013 19:01:01 GMT -8
"Go ask Steve Jobs."
Apple 3.0 won't change from Apple 2.0 so quickly. It doesn't seem like it but Apple is hugely changed from five years ago. Total secrecy has been encoded into Apple's DNA from 1996, like it or not.
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Post by Mav on Feb 2, 2013 19:02:11 GMT -8
Also, this is really more of a numbers thread, so let's try to keep it on topic, please.
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