Much work ahead

Today, Apple essentially met conservative WS consensus estimates, but missed on almost every single product when compared to my estimates, resulting in an overshoot of roughly 10% in EPS. If that weren't enough, Apple has now reclassified the operating segments (Greater China representing 12.5% of total revenues during last quarter has split out of Asia/Pacific) and product revenue breakdown (merged iTunes with Software and Services, and Accessories previously included but not broken out within their respective product line are all now mixed with Peripherals) all of this starting last quarter and historically for only the last couple of years. Needless to say, both issues (yet another "transitional" shortfall and product/segment reporting shifts) will be a pain to reconcile in my model. Not nice, Apple. However, after I get it all clicking once again, it may result in a slightly simpler model.

Main highlights:

iPhone units came in at 47.8m vs. my expected 53m (I was 10.9% too high)
iPad units at 22.9m vs. my 25m forecast (9.4% too high)
Mac units at 4.06m vs. my 5.18m (a whopping 27.5% too high)
iPod units at 12.7m vs. my 14m (10.4% too high)
iTunes/Software/Services revenue of $3.7b vs. my $3.5b (6% too low)
Newly combined Peripheral/Accessories revenue of $1.8b can't be compared to my published forecasts.

Recognized hardware revenues and ASPs by product are not comparable to my forecasts, except perhaps for the Mac (revenue of $5.5b vs. my $6.9b forecast which was 24.7% too high, and Mac ASP at $1,359 vs. my $1,329 estimated which was 2.2% too low). However, even after shedding the accessories contribution, all ASPs still came out higher than modeled (with accessories) which suggests a more favorable mix than expected.

Total revenue was $54.5b vs. my $58.6b forecasted (7.5% too high)
GM% was 38.6% vs. my 39.5% forecast (84bps too high)
Diluted EPS of $13.81 vs. my 15.20 estimate (10.1% too high)

Cash per share is at $145 vs. $140 estimated, meaning I need to puzzle out yet another detail.

Trailing valuation (10x ttm EPS + cash + ttm divds) is now $441+145+5=$591. The forward projections will have to wait for the reformulation in terms of the reclassified revenue sources, and a thorough reexamination of all the longer term assumptions.

Apologies for getting it wrong once again.

Fiscal 1Q 2013 Final Estimates

As of Tuesday's closing price of $485.92, AAPL is trading at 8.3x my forward EPS estimate (5.9x ex-cash). This extremely low forward valuation is similar to that of mid 2011, when it traded in the mid $300s ahead of $44 EPS for FY2012 and mid $80s in cash per share at the time. The stock ended up doubling a year later. Interestingly, my (lowered) target now implies a doubling of the current price over the next 12-18 months.

Detailed estimates:

3mo ending Dec-2012   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         52,000    11.75
Analysts consensus     54,580    13.34
Deagol estimates       58,601    15.20


3mo ending Mar-2013   Rev($M)   EPS($)
-------------------   -------   ------
Deagol estimates       49,452    12.89
Analysts consensus     46,890    12.10
Apple guide (est.)     44,000     9.75

Revised: Fiscal 4Q 2012 Final Estimates

I'm not a fan of revising estimates the day before the report. However, this time Apple has essentially pre-anounced the iPad number and everyone will post their revisions, so I might as well get on with it. In addition to the more than four million iPad units shortfall, I'm revising the Mac estimate lower by half a million units mainly on an inventory drawdown and, to a lesser extent, widespread reports of PC market weakness.

These changes result in about $3 billion lower revenue and $0.80 lower EPS for the quarter. The gross margin percent goes up about 70 basis points on the higher iPhone mix.

Additionally, I took this opportunity to tweak the longer-term projections to account for the new products introduced yesterday. Here are the usual details:

3mo ending Sep-2012   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         34,000     7.65
Analysts consensus     35,800     8.75
Deagol estimates       36,063     9.68

Long-term Apple Segmented Revenue Visualizations and Projections

Two years ago I made the rather conservative (but somehow controversial back then) prediction that by this last quarter just ended in September and about to be reported next week, the iPad would have passed the Mac in trailing-twelve-months revenue. That post also included a far-reaching projection into the future for all product lines, as well as some specific estimates for FY2011.

As it turned out, iPad revenue has in fact already exceeded Mac revenue on a trailing-twelve-months basis but by the first quarter (Jan) of this fiscal year (at least I got the year right): for calendar 2011 the iPad logged in revenues of $24.9b while the Mac only managed $23b. Regarding the other specific predictions for FY11, I was slightly high for iPod revenue ($8.0b vs. $7.5b actual), iTunes ($6.5b vs. $6.3b actual), and Software ($3.2b vs. $3.0b actual). I came up way, way short on iPhone ($32.7b vs. $47.1b actual) and iPad ($18.0b vs. $20.4b actual), and a tad short on Mac ($21.0b vs. $21.8b actual) and Peripherals ($2.2b vs. $2.3b actual).

About the very long-term projection (shaded hazy part), a careful study of the chart shows some considerable differences, which I'll leave up to the reader to compare visually. Here's the update now with the FY2013 predictions (click on all charts to enlarge even more):

Animo Venezuela

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