Wednesday, October 20, 2010

Fiscal 4Q '10 actual results vs. estimates

I'll have to fine tune the iPhone and iPad projections. Everything else came in a bit soft, with iPod and iTunes the weakest. On the income statement, I started with a relatively small $219m (1.1%) revenue shortfall, but made it worse at every step (most impact was from guessing GM a bit high) and it widened to $403m (7.4%) shortfall in pretax income. Fortunately this was almost all offset by a much lower tax rate than estimated, resulting in actual EPS only 9 cents short of estimated, or within 2%. Guidance for the current quarter was impressive.
Here's all the details. I've included the combined iPad+iPhone figures to highlight how those two big errors balanced out.
                 Est       Act       Err      Err%
Units(K)      ------    ------    ------    ------
iPhone        12,513    14,102    -1,589    -11.3%
iPad           5,833     4,188    +1,645    +39.3%
-----------   ------    ------    ------    ------
iPhone+iPad   18,346    18,290    +   56    + 0.3%
-----------   ------    ------    ------    ------
Mac            3,925     3,885    +   40    + 1.0%
iPod           9,621     9,051    +  570    + 6.3%

ASP($)        ------    ------    ------    ------
iPhone           611       626    -   15    - 2.4%
iPad             668       667    +    1    + 0.2%
-----------   ------    ------    ------    ------
iPhone+iPad      629       635    -    6    - 0.9%
-----------   ------    ------    ------    ------
Mac            1,256     1,254    +    2    + 0.2%
iPod             166       163    +    3    + 1.8%

Revenue($M)   ------    ------    ------    ------
iPhone         7,643     8,822    -1,179    -13.4%
iPad           3,897     2,792    +1,105    +39.6%
-----------   ------    ------    ------    ------
iPhone+iPad   11,540    11,614    -   74    - 0.6%
-----------   ------    ------    ------    ------
Mac            4,930     4,870    +   60    + 1.2%
iPod           1,599     1,477    +  122    + 8.2%
iTunes         1,331     1,243    +   88    + 7.0%
SW               671       662    +    9    + 1.4%
Peripherals      492       477    +   15    + 3.2%

P&L($M)       ------    ------    ------    ------
Revenue       20,562    20,343    +  219    + 1.1%
COGS          12,731    12,831    -  100    - 0.8%
GM             7,832     7,512    +  320    + 4.3%
OpEx           2,037     2,065    -   28    - 1.4%
OpInc          5,795     5,447    +  348    + 6.4%
OI&E              69        14    +   55    390.0%
Pre-tax        5,864     5,461    +  403    + 7.4%
Tax            1,466     1,153    +  313    +27.1%
NetInc         4,398     4,308    +   90    + 2.1%
Shares           930       929    +    1    + 0.1%
EPS($)          4.73      4.64    + 0.09    + 1.9%

Ratios        ------    ------    ------    ------
GM%            38.1%     36.9%    + 1.2%    + 3.1%
OpInc%         28.2%     26.8%    + 1.4%    + 5.3%
Tax%           25.0%     21.1%    + 3.9%    +18.4%
NetInc%        21.4%     21.2%    + 0.2%    + 1.0%

Guidance      ------    ------    ------    ------
Rev($M)       22,300    23,000    -  700    - 3.0%
EPS($)          4.50      4.80    - 0.30    - 6.3%

PED already posted my comprehensive ranking of the analysts surveyed by him, so I won't repeat it here (yes, I'm embarrassed of ranking smack in the middle of the pack). Given the mixed bag in how us bloggers nailed the top and bottom lines and missed bad on iPad units and GM, while analysts seemed to do better at everything else except iPhone, I decided to look into the aggregated errors by forecast category for both groups.
                                   Error
                               reduction
Category   Bloggers     Pros   over Pros
--------   --------   ------   ---------
Revenue       2.24%    6.54%      65.85%
EPS           3.38%   11.13%      69.64%
iPhones      14.43%   19.20%      24.84%
iPods         7.80%    6.24%     -25.04%
Macs          3.15%    4.07%      22.52%
iPads        31.89%   18.87%     -68.98%
GM            6.23%    3.48%     -79.06%
--------   --------   ------   ---------
Overall       9.87%    9.93%       0.59%

Finally, here's another comprehensive ranking, this time with the average errors accumulated over the last three quarters. We still take the top spots, but our collective edge in accuracy is now within reach of pros, although more than just a few of them will need to step up. Still, we better hunker down and tighten our models for the current quarter and next year. Kudos to Horace Dediu for his impressive mastery in forecasting all categories over the last two quarters.

[Update: see the latest ranking including Q1 2011 blowout numbers: Smooth Operator]

Rank  Error%  Analyst, Affiliation (# of quarters participating)
----  ------  ------------------------------------------------------
 1     4.86%  Horace Dediu, Asymco (2)
 2     6.35%  Andy Zaky, Bullish Cross (3)
 3     6.55%  Daniel Tello, Deagol's AAPL Model (3)
 4     6.59%  Turley Muller, Financial Alchemist (3)
 5     6.60%  Ashok Kumar, Rodman & Renshaw (3)
 6     6.72%  Mike Abramsky, RBC Capital (3)
 7     6.74%  Ralph Schackart, William Blair (2)
 8     6.80%  Alexis Cabot, Apple Finance Board (3)
 9     7.10%  Yair Reiner, Oppenheimer (3)
10     7.33%  Nehal Chokshi, Technology Insights (2)
11     7.50%  Robert Paul Leitao, Apple Finance Board (3)
12     7.73%  Robert Cihra, Caris & Co. (1)
13     7.84%  Jeff Fosberg, Apple Finance Board (2)
14     7.87%  Chris Whitmore, Deutsche Bank (3)
15     7.95%  William Fearnley, Janney Capital (2)
16     8.03%  Toni Sacconaghi, Bernstein Research (3)
17     8.13%  Jeff Fidacaro, Susquehanna (3)
18     8.32%  Ben Reitzes, Barclays Capital (3)
19     8.70%  Bill Shope, Credit Suisse (1)
20     8.80%  Patrick Smellie, Apple Finance Board (1)
21     9.06%  Maynard Um, UBS (1)
22     9.13%  Richard Gardner, Citigroup (3)
23     9.17%  Scott Craig, Bank of America/Merrill Lynch (3)
24     9.20%  Doug Reid, Stifel Nicholaus (3)
25     9.40%  Dennis Hildebrand, Apple's Gold (2)
26     9.43%  Keith Bachman, BMO Capital (3)
27     9.44%  Brian Marshall, Gleacher & Co. (3)
28     9.56%  Gene Munster, Piper Jaffray (3)
29     9.59%  Kathryn Huberty, Morgan Stanley (3)
30     9.75%  Nicolae Mihalache, Traderhood (2)
31     9.89%  T. Michael Walkley, Peter Misek, Canaccord Genuity (2)
32     9.90%  Mark Moskowitz, J.P. Morgan (3)
33    10.16%  Matthew Hoffman, Cowen & Co. (2)
34    10.30%  Shaw Wu, Kaufman Bros. (3)
35    10.34%  Rajesh Ghai, Think Equity (2)
36    11.22%  Tavis McCourt, Morgan Keegan (3)
37    11.74%  Vijay Rakesh, Sterne Agee (2)
38    13.04%  Alex Gauna, JMP Securities (1)
39    15.67%  Collin Gillis, BGC Partners (1)
40    16.38%  Daniel Ernst, Hudson Square (1)
----  ------  ------------------------------------------------------
12.1   7.50%  Bloggers (24)
23.3   9.48%  Pros (71)
11.2   1.98%  Bloggers edge

6 comments:

Roy in San Jose said...

You're still up there, Daniel. And a class act, too!

With so many different products and markets, it will become increasingly more difficult to nail down every category accurately for Apple. Especially with the new Mac notebooks that will have the iPad/iPhone like user interfaces. The fuzzy zone that transcends notebooks and iPads will grow wider, I think!

Nice problems to have, no doubt!

Anonymous said...

As I posted on Asymco's blog:
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.

Anonymous said...

In my opinion,

It's kosher to combine the iPad / iPhone numbers as a method of cancelling errors because we already had good projections on iOS devices as a total.

Tetrachloride AFB

jimlongo said...

Do professional analysts ever admit being embarrassed at their misses?

Nice job Deagol. Thanks for your efforts.

javajack said...

Thanks, Daniel, I always look forward to reading your results. What was the problem with ipad in reality? Apple couldn't manufacture enough to meet demand?

deagol said...

I think the problem was we placed too much credence to supply-side rumors and speculation. Clearly Apple could've sold more if it could've built more, as it was supply constrained into September. But we all knew this was the case. It was clear Apple would sell all it could make, so we naturally latched on (excessively) to manufacturing-related reports for our estimates.

BTW, I don't think the iPad shortcoming is a significant reason for the stock pullback. The real reason, IMO, would be the huge prior runup, and the 100-150 bps GM miss.