Wednesday, June 30, 2010

Fiscal 3Q 2010 Final Estimates

Apple now trading at 12.1 times my FY2011 EPS (9.8x after excluding cash)

3mo ending Jun-2010 Rev($M) EPS($)
------------------- ------- ------
Apple guidance 13,200 2.34
Analysts consensus 14,604 3.05
Deagol estimates 15,750 3.57

3mo ending Sep-2010 Rev($M) EPS($)
------------------- ------- ------
Apple guide (est.) 16,450 3.27
Analysts consensus 16,453 3.69
Deagol estimates 18,271 4.46

12mo ending Sep-2011 Rev($M) EPS($)
-------------------- ------- ------
Analysts consensus 71,225 16.16
Deagol estimates 83,993 20.48

Valuation (12mo beginning on) EPS($) 25x 20x
----------------------------- ------ --- ---
Trailing (Jul-2009) 13.34 334 267
Fair value (Jul-2010) 19.05 476 381
1yr target (Jul-2011) 24.23 606 485

Revenue breakdown:
Mac 4,125 ( 3,338 @ $1,236)
iPad 2,150 ( 3,258 @ $ 660)
iPhone 5,456 ( 9,042 @ $ 603)
iPod 1,655 (10,124 @ $ 163)
iTunes 1,258
Software 641
Periph 465

Income statement:
Revenue 15,750
COGS 9,497
GM 6,253
OpEx 1,850
OpInc 4,403
OI&E 62
Pre-tax 4,465
Tax 1,161
NetInc 3,304
Shrs. 925
EPS 3.57

GM% 39.7%
OpInc% 28.0%
Tax% 26.0%
NetInc% 21.0%

Check out these fellow bloggers' estimates:
Jeff Fosberg: AFB's user Mercel
Alexis Cabot: AFB's user awcabot
Turley Muller (by way of PED): How Turley Muller calls Apple

And PED's smack-down is on:


Andy M. Zaky said...

Very nice Daniel! Keep up the good work. Our estimates are pretty close. I guess that's a good sign for Apple? So i see you decided to tighten up gross margin's for the quarter. I'm still trying to determine how full of crap Apple is regarding iPad gross margins and exactly how much it will in fact effect Apple's overall gross margins.

Your macintosh sales estimate is very strong? I was wondering whether you can give me an argument for how you arrived at that estimate. I'm still doing research on Mac sales for the quarter so I published only initial estimates until I feel very comfortable with my numbers. Right now, I feel somewhat uncomfortable with my iPHone estimates, but I don't think I'll ever feel fully comfortable with those projections even up to when Apple announces. I'm also somewhat questioning my Mac estimates and total gross margin for the quarter.

Thanks for your estimates! Our Q4 estimates are closely aligned as well.

-Andy Zaky

Tetrachloride said...

I'm concerned about the Mac unit sales as well as estimated by Daniel.

Color me more pessimistic for this quarter but riding a rocket train for next quarter.


Tetrachloride of the MacObserver "Apple Finance Board

deagol said...

@Andy, thanks. Knowing that our estimates are so close is indeed a good sign, and reassuring to me. Yes I did give minimal credence to Apple's margin guidance, but still came up with a 370 bps upside, which is on the high side of the historical guidance beat. I wouldn't mind being low there. Regarding Mac units: in both Q1 and Q2 they achieved 33% unit growth, and I'm modeling 28% growth for Q3. I wouldn't mind being high there. I like to model Macs aggressively, but Apple beat me handsomely in Q1, which I didn't feel happy about. I don't pay much attention to the IDCs, Gartners, and such. Try not to question yourself too much, as there's not much else one could base estimates on, beyond our intuitive gut feeling. I'm confident we'll beat the crap out of them pros, once again.

@Tet, see above regarding my Mac unit estimate. Rocket train for 4Q? Do you think I'm on it?

Anonymous said...

With Apple drawing down old iPhone inventory in order to transition to iPhone 4, your 9mm unit estimate implies that they sold ~10mm to customers (which would top the previous high by >1mm). Do you think that's really possible, especially given a pause in sales in front of the iPhone 4 launch?

deagol said...

Anon, interesting point. I'm not convinced there must be a ~1M unit inventory drawdown just because it's now constrained. There was no significant drawdown last year for the 3GS release, which was also constrained as the quarter ended. Apple reported sales of over 5.2M units in Q3 '09, compared to 3.8M in Q2 '09.

Here's a relevant excerpt from last year's conference call:

Ben Reitzes - Barclays Capital
Okay, thanks and with regard to the surge at the end of the quarter of iPhones, 5.2 million and you’re constrained on the 3GS, what is the inventory situation like? I mean, you were running at over a million, I believe, Tim, and how did you end the quarter on inventory? And how is the pent-up demand look though heading into the next one?

Timothy D. Cook
The iPhone channel inventory was flat sequentially, so it was approximately the same number from the beginning of the quarter and at the end of the quarter. And what that means obviously since we were selling a lot more units at the end, that we do not have a channel loaded with the number of units that we would like at this time and you can see that in terms of stock-outs on the 3GS.

Ben Reitzes - Barclays Capital
What’s that unit number, and then I’ll cede the floor here?

Timothy D. Cook
The unit number?

Ben Reitzes - Barclays Capital
Of inventory?

Timothy D. Cook
You know, consistent with what I’ve said before, you can do the math, but it’s about 1.83 million, just slightly over 1.8.

Ben Reitzes - Barclays Capital
Thanks a lot, Tim.

Timothy D. Cook
That includes in-transits that we’ve invoiced and demos we’ve counted in a conservative manner.

javajack said...

Thanks for your work. I'm very optimistic about where this is all going.

Al Velasco said...

Hey Deagol,

Apple historically beats on earnings but I'm more concerned about forward guidance and on margins. I heard the whisper # is $3.65. I think they will beat that number but I'm more worried about their margins and guidance as the i-Phone 4 controversy and negative publicity will probably make some consumers think twice about buying a (defective) product..

Consumer Reports are friggin idiots..