Tuesday, January 18, 2011

Smooth Operator




No need to ask.
He's a smooth operator


"That's a part of the magic at Apple, and I don't want anybody copying it."

"Excellence has become a habit."

"If this is cannibalization it feels pretty good."


I'm happy and relieved to see Apple finally beating my estimates after I had been slightly overshooting for the last couple of quarters.
Thanks to Steve, Tim and the rest of the Team, all Apple employees, for kicking major ass. To paraphrase a commenter in another post: me and my family and our accounts thank you, Apple.

Anyway, on to the details. Solid quarter with upside across the board, except Macs and iTunes coming a bit below my estimates. The $670m revenue upside and 50 bps GM beat was tempered by slightly higher than expected operating expenses and tax rate, resulting in a 21 cent "surprise" (3.2%).
But the real shock of the report is not that much on the December quarter but in Q2 ending in March, which looks to be another record in the making (ironically Q2 is usually the weakest of the year). Not only did they guide higher than the admittedly lowball WS analysts expectations, PO also shattered my own "sandbagged" estimate, and almost guided up into my "real" estimate of $5.07. That would have been, and is unprecedented.

All the details:
Products         Est       Act       Err      Err%
Units(K)      ------    ------    ------    ------
Mac            4,295    4,134     +  161    + 3.9%
iPod          19,346   19,446     -  100    - 0.5%
iPhone        16,517   16,235     +  282    + 1.7%
iPad           6,541    7,331     -  790    -10.8%

ASP($)        ------    ------    ------    ------
Mac            1,299     1,313    -   14    - 1.1%
iPod             163       176    -   13    - 7.5%
iPhone           621       645    -   24    - 3.7%
iPad             657       629    +   28    + 4.5%

Revenue($M)   ------    ------    ------    ------
Mac            5,579     5,430    +  149    + 2.7%
iPod           3,151     3,425    -  274    - 8.0%
iPhone        10,255    10,468    -  213    - 2.0%
iPad           4,295     4,608    -  313    - 6.8%
iTunes         1,473     1,431    +   42    + 2.9%
SW               722       786    -   64    - 8.1%
Periph           597       593    +    4    + 0.6%

P&L($M)       ------    ------    ------    ------
Revenue       26,071    26,741    -  670    - 2.5%
COGS          16,155    16,443    -  288    - 1.8%
GM             9,917    10,298    -  381    - 3.7%
OpEx           2,366     2,471    -  105    - 4.2%
OpInc          7,550     7,827    -  277    - 3.5%
OI&E              64       136    -   72    -53.2%
Pre-tax        7,614     7,963    -  349    - 4.4%
Tax            1,789     1,959    -  170    - 8.7%
NetInc         5,825     6,004    -  179    - 3.0%
Shrs.            935       933    +    2    + 0.2%
EPS($)          6.23      6.43    - 0.21    - 3.2%

Ratios        ------    ------    ------    ------
GM%            38.0%     38.5%    - 0.5%    - 1.2%
OpInc%         29.0%     29.3%    - 0.3%    - 1.1%
Tax%           23.5%     24.6%    - 1.1%    - 4.5%
NetInc%        22.3%     22.5%    - 0.1%    - 0.5%

Guidance      ------    ------    ------    ------
Rev($M)       20,000    22,000    - 2000    - 9.1%
EPS($)          4.00      4.90    - 0.90    -18.4%

Philip Elmer-DeWitt just posted the analysts ranking for only this last quarter, which has us bloggers taking back all the top spots. Below is the cumulative ranking over the last 4 quarters. Even though I improved my average error, I still dropped 3 places thanks to the excellent showing by Turley, Patrick, and Alexis who kicked me out of the top 5. And now Robert is all on my heels. Game on! :D

Rank  Error%  Analyst, Affiliation (# of ests)
----  ------  ------------------------------------------------------
 1     5.20%  Horace Dediu - Asymco (3)
 2     5.51%  Andy Zaky - Bullish Cross (4)
 3     5.58%  Turley Muller - Financial Alchemist (4)
 4     5.62%  Patrick Smellie - Apple Finance Board (2)
 5     5.75%  Alexis Cabot - Apple Finance Board (4)
 6     5.76%  Daniel Tello - Deagol's AAPL Model (4)
 7     6.50%  Robert Paul Leitao - Apple Finance Board (4)
 8     6.60%  Ashok Kumar - Rodman & Renshaw (3)
 9     6.68%  Mike Abramsky - RBC Capital (4)
10     6.74%  Ralph Schackart - William Blair (2)
11     6.75%  Yair Reiner - Oppenheimer (4)
12     6.79%  Jeff Fosberg - Apple Finance Board (3)
13     7.17%  Hendi Susanto - Gabelli & Co.  (1)
14     7.33%  Bill Shope - Credit Suisse, Goldman Sachs (2)
15     7.44%  Nicolae Mihalache - Traderhood (3)
16     7.45%  Chris Whitmore - Deutsche Bank (4)
17     7.58%  Nehal Chokshi - Technology Insights (3)
18     7.73%  Robert Cihra - Caris & Co. (1)
19     7.78%  Dennis Hildebrand - Apple's Gold (3)
20     8.04%  Mark Beauch - Apple Finance Board (1)
21     8.22%  William Fearnley - Janney Capital (3)
22     8.35%  Ben Reitzes - Barclays Capital (4)
23     8.37%  Toni Sacconaghi - Bernstein Research (4)
24     8.41%  Scott Sutherland - Wedbush (1)
25     8.54%  Jeff Fidacaro - Susquehanna (4)
26     8.66%  Scott Craig - Bank of America/Merrill Lynch (4)
27     8.74%  Richard Gardner - Citigroup (4)
28     9.03%  Brian Marshall - Broadpoint AmTech, Gleacher & Co. (4)
29     9.07%  Keith Bachman - BMO Capital (4)
30     9.08%  Mark Moskowitz - J.P. Morgan (4)
31     9.42%  Doug Reid - Thomas Weisel, Stifel Nicholaus (4)
32     9.49%  Matthew Hoffman - Cowen & Co. (3)
33     9.70%  Peter Misek, T. Michael Walkley - Canaccord Genuity (3)
34     9.75%  Gene Munster - Piper Jaffray (4)
35     9.88%  Kathryn Huberty - Morgan Stanley (4)
36     9.95%  Shaw Wu - Kaufman Bros. (4)
37    10.20%  Maynard Um - UBS (2)
38    10.44%  William Power - Baird (1)
39    10.92%  Rajesh Ghai - Think Equity (3)
40    11.06%  Tavis McCourt - Morgan Keegan (4)
41    11.55%  Brian White - Ticonderoga (1)
42    12.23%  Vijay Rakesh - Sterne Agee (3)
43    12.79%  Daniel Ernst - Hudson Square (2)
44    13.04%  Alex Gauna - JMP Securities (1)
45    13.94%  Charlie Wolf - Needham (1)
46    15.67%  Collin Gillis - BGC Partners (1)
----  ------  ------------------------------------------------------
 8.5   6.36%  Bloggers (35)
28.2   9.44%  Pros (101)
19.7   3.08%  Bloggers edge

I couldn't be more delighted that more and more independent (and really good) analysts are joining in on the fun, and helping so many investors to appreciate the real Apple (and AAPL) story.

Congrats to all and keep it coming!

9 comments:

Anonymous said...

Thanks for your estimates and rankings. I appreciate you sharing your work.

Anonymous said...

I'll have to try harder. : )

Posted on AFB under Dawn Trader sponsored thread. EPS estimate $6.38. Error percent .77%

Gregg Thurman

javajack said...

Thanks, Daniel. I can never wait to read your estimates. I wish we had more in between quarters to discuss. So, you hold out a carrot for the next quarter, saying it will be another blowout. Any incite, details available at this point?

pats said...

Thanks
Daniel, I appreciate all your work, and your model is outstanding. Pleasure to get to compare notes and work the numbers with the folks at AFB.

Patrick Smellie

Anonymous said...

Daniel,

Looking forward to your revised 2q early estimates now that PO has 'moved the bar' up almost to your earlier bogey.

Fadi El-Eter said...

Congratulations on being mentioned no Bloomberg. AAPL is one of the few stocks I trust. My problem with this stock is that it's heavily linked to Steve Jobs (and maybe rightly so), as an individual.

ca said...

Thank you for all your hard work. My Problem is with the hedge funds that manipulate this stock with no mercy - traders are getting the shaft!

ca said...

should have said "investors are getting the shaft"

javajack said...

Yup, I'm getting big pressure today from my investment advisor. He says the stock should have rallied by now or it will continue to slide. He said the current price is based on what's next not just the numbers. He says the market is reacting to Apple without jobs. My response was what about last time Tim Cook was in charge. Apple grew significantly, plus he is basing Apple's slide on two days when the banks, the whole market sucks.

Yeesh!