Tuesday, April 20, 2010

Apple beats up everyone

Pro analysts 51% worse than amateurs

Apple today reported $13.50b revenue, $3.33 EPS, 8.75M iPhones, 10.89M iPods, 2.94M Macs, and 41.67% gross margin, beating everyone down to a pulp.

I took PED's estimates compilation of amateur and professional AAPL analysts, computed each estimate's percent error against Apple's actual numbers, averaged the six categories' errors for each analyst, and ranked them all from best to worst. I also averaged the errors for the six amateurs and the 19 pros, and calculated how much worse these did in relation to us amateurs. Here's the table.

 %Err  Analyst, Affiliation
----- ---------------------------------------
5.9% Turley Muller, Financial Alchemist
7.2% Daniel Tello, Deagol's AAPL Model
7.2% Robert Paul Leitao, Apple Finance Board
7.3% Andy Zaky, Bullish Cross
8.2% Ashok Kumar, Rodman & Renshaw
8.7% Bill Shope, Credit Suisse
8.8% Patrick Smellie, Apple Finance Board
9.6% Alexis Cabot, Apple Finance Board
9.9% Yair Reiner, Oppenheimer
10.1% Mike Abramsky, RBC Capital
10.3% Ben Reitzes, Barclay's Capital
10.3% Jeff Fidacaro, Susquehanna Financial
10.6% Toni Sacconaghi, Bernstein Research
10.8% Peter Misek, Canaccord Adams
11.8% Mark Moskowitz, J.P. Morgan
11.9% Chris Whitmore, Deutsche Bank
11.9% Tavis McCourt, Morgan Keegan
12.1% Gene Munster, Piper Jaffray
12.3% Doug Reid, Thomas Weisel
12.3% Shaw Wu, Kauffman Bros.
13.3% Keith Bachman, BMO Capital
13.4% Scott Craig, Merrill Lynch
13.7% Brian Marshall, Broadpoint AmTech
14.1% Kathryn Huberty, Morgan Stanley
14.3% Richard Gardner, Citigroup
----- ---------------------------------------
11.6% Professionals
7.7% Amateurs
----- ---------------------------------------
51.4% Pros error increase % on amateurs

Clearly Steve Jobs, the sneaky rascal, punked us all with his announcement of 50M total iPhones.

I came $905M (-6.7%) below actual reported revenue mostly due to huge iPhone and iPod upside, but also all other revenue sources except Mac which almost compensated for these. ASPs came in higher than expected for iPod but Mac and iPhone were lower. I keep underestimating peripherals by a relatively significant amount (-12.8%) although it's not significant in absolute terms.

Fortunately I guessed right at gross margin percentage, so this near $1b error comes down to almost $0.4b beat in operating income. Now, if one were to apply a normal tax rate to that, my net income would have come only $280M below, resulting in an EPS beat of 30 cents. But a 24% effective tax rate (630bps below normal) turned it into a 56 cent beat. That's 46% of the upside caused by an unpredictably low tax rate. How is one supposed to model for this, if Apple itself can't even guide within 20% of the effective tax rate? In any case, as a shareholder I won't complain.

Complain? Are you nuts? $333, baby. Come on. Right now. Hell yea! lol


. Est Act Err Err%
. ------ ------ ------ ------

Units (K):
Mac 2,949 2,943 + 6 + 0.2%
iPhone 7,500 8,752 -1,252 -14.3%
iPod 10,400 10,885 - 485 - 4.5%

ASP ($):
Mac 1,320 1,278 + 42 + 3.3%
iPhone 635 622 + 13 + 2.1%
iPod 162 171 - 9 - 5.5%

Revenue breakdown ($M):
Mac 3,893 3,760 + 133 + 3.5%
iPhone 4,764 5,445 - 681 -12.5%
iPod 1,681 1,861 - 180 - 9.7%
Music 1,238 1,327 - 89 - 6.7%
Perph 412 472 - 60 -12.8%
SW 608 634 - 26 - 4.2%

Income statement ($M):
Revenue 12,594 13,499 - 905 - 6.7%
COGS 7,367 7,874 - 507 - 6.4%
GM 5,227 5,625 - 398 - 7.1%
OpEx 1,631 1,646 - 15 - 0.9%
OpInc 3,595 3,979 - 384 - 9.6%
OI&E 35 50 - 15 -29.8%
Pre-tax 3,631 4,029 - 398 - 9.9%
Tax 1,089 955 + 134 +14.1%
NetInc 2,541 3,074 - 533 -17.3%
Shrs. 918 923 - 5 - 0.5%
EPS 2.77 3.33 - 0.56 -16.9%

Ratios:
GM% 41.5% 41.7% - 0.2% - 0.4%
OpInc% 28.5% 29.5% - 0.9% - 3.1%
Tax% 30.0% 23.7% + 6.3% +26.6%
NetInc% 20.2% 22.8% - 2.6% -11.4%


One last thing, Apple guided for $13.0b to $13.4b in revenue, midpoint $13.2b, and $2.28 to $2.39 in EPS, midpoint $2.335. This was my guidance prediction made a week ago:
3mo ending Jun-2010   Rev($M)   EPS($)
------------------- ------- ------
Apple guidance (e) 13.200 2.40
Analysts consensus 12,913 2.63
Deagol estimates 14,675 3.21

Monday, April 19, 2010

iPad web usage already beats Droid, iPod in sight




I predict iPad passes iPod before June 3. Link here or click on the image above. Please note that at some odd hours the last data point may still require an adjustment (this is a live chart, automatically updated daily), I believe based on their relative geographic presence in the parts of the web they see, or something.
Currently, Android's 2.1 installed base is probably made up of mostly Motorola Droid phones, at least for now. Some others are HTC Nexus One, their recent Desire and Legend, and their upcoming Incredible and Evo 4G. And a whole bunch of phones by others soon. See the compared web usage for all the Android versions here.
Data provided by Net Market Share

Saturday, April 17, 2010

Deagol vs. Market


Click to enlarge. Not sure if it needs any more explanation. It's kind of complicated, yet simple. Ask in comments if you have any question.

Update: A reader requested earlier forecasts. Here's a sloppy zoom-in showing those (click to enlarge).

Tuesday, April 13, 2010

Fiscal 2Q 2010 Final Estimates

3mo ending Mar-2010   Rev($M)   EPS($)
------------------- ------- ------
Apple guidance 11,200 2.12
Analysts consensus 11,960 2.44
Deagol estimates 12,594 2.77


3mo ending Jun-2010 Rev($M) EPS($)
------------------- ------- ------
Apple guidance (e) 13.200 2.40
Analysts consensus 12,913 2.63
Deagol estimates 14,675 3.21


12mo ending Sep-2010 Rev($M) EPS($)
-------------------- ------- ------
Analysts consensus 55,091 12.01
Deagol estimates 59,721 13.66


Valuation (12mo beginning on) EPS(e) PPS(25x)
----------------------------- ------ --------
Trailing (Apr-2009) 11.22 281
Fair value (Apr-2010) 15.72 393
1yr target (Apr-2011) 19.82 495

PED:
How many iPhones did Apple sell?
How many Macs did Apple sell?
How many iPods did Apple sell?
How big was Apple's second quarter?

Revenue breakdown:
Mac 3,893 ( 2.95M @ $1,320)
iPhone 4,764 ( 7.50M @ $ 635)
iPod 1,681 (10.40M @ $ 162)
Music 1,238
Software 608
Periph 412
-------- ------
Total 12,594


Income statement:
Revenue 12,594
COGS 7,367
GM 5,227
OpEx 1,631
OpInc 3,595
OI&E 35
Pre-tax 3,631
Tax 1,089
NetInc 2,541
Shrs. 918
EPS 2.77


Ratios:
GM% 41.5%
OpInc% 28.5%
Tax% 30.0%
NetInc% 20.2%

Friday, April 9, 2010

Another revenue segments visualization

Before I post my Q2 predictions next week, I thought I'd entertain those who are a bit anxious with yet another visualization of Apple's various revenue sources (click to enlarge):



First thing you should notice is the log scale. Second, you don't get a legend for the colored lines. Ha! [Update: game over, see the 10 year projection above] It occurred to me as a fun and educational research activity to leave it like that and let you work out which color is which product segment. It shouldn't be hard if you remember your Apple products history. And as an incentive, I'll send you the continuation of the graph with my estimates for the next 10 years (yea I know 10 years is crazy but whatever) if you email me the correct color/product matching. Don't spoil it for others in the comments, please!

Enjoy!
-d

Update:
Well, 15 readers have played along and correctly cracked the color key (with just a little help for a few), and are enjoying the prize. The toughest part seems to be how to name those colors! Blame it on the mischievous guys and gals from the MacBU at Microsoft for picking those default colors for charts in Excel for Mac.
These were the names readers used for just two of them:
teal, turquoise, blue-green, light blue, bright blue, mid-tone blue (teal)
gray, blueish gray, light blue, light purple, purple, lightest blue (lavender?)
Yikes! I wonder what they called them at the MacBU. Probably something impossible like 'Blue Chill' and 'Blue Haze'.
Good job everyone. And if anyone's stuck... get a clue already. :P
Earnings estimates tomorrow afternoon (Tuesday).

Sunday, April 4, 2010

Ten weeks later, AAPL numbers elude financial web sites

Closing in on ten weeks since Apple's last report where they "cleared up" any confusion about accounting rules, most financial sites still show incorrect data on their profiles for Apple.

So what the f**k is AAPL's P/E??

Turns out I was being unfair to Yahoo! in singling them out. This is a generalized industry problem and not exclusive to a few bad sites. Out of the 16 major sites I looked at (2 good ones submitted by readers), only 7 have managed to update their historical financials with the retrospective amendments freely available from Apple's Investor Relations site. Even though 11 do report somewhere the correct trailing P/E ratio, in some cases they still quote a wrong P/E (perhaps derived from their outdated financials) on a different section of the site, or even on the same page. Finally, a couple of sites have simply stopped providing analysts estimates for Apple (Forbes and Yahoo!).

Here's a table with all the sites and data I checked.

Site ttmEPS P/E Fncls Ests
----------- ------ ---- ----- ----
Forbes $ 8.17 28.9 Wrong N/A
CNN Money N/A 28.9 Wrong Ok (incorrect expectations history)
SmartMoney $ 8.17 28.9 Wrong Ok
Nasdaq $ 8.17 28.9 Wrong Ok
Zacks $ 8.17 28.9 Wrong Ok
Yahoo! $10.27 23.0 N/A N/A Ok! (fixed as of 4/15, 11 weeks later!)
CNBC $10.25 23.0 Wrong Ok
FOXBusiness $10.25 22.7 Wrong Ok
MarketWatch $10.25 23.0 Wrong Ok
Google $10.25 23.0 Ok N/A
Reuters $37.33? 23.0 Ok Ok (missing March quarter!?)
MSN Money $10.25 23.0 Ok Ok
Scottrade $10.25 23.0 Ok Ok
Fidelity $10.24 23.0 Ok Ok
Ameritrade $10.25 23.0 Ok Ok (excellent tool!)
ft.com $10.25 23.6 Ok Ok

Please add links in the comments for any other financial research site's flawed Apple numbers, or to let me know if any of these have fixed theirs.