Despite weak PC and cell-phone demand, Apple Inc. (NASDAQ:AAPL) continues on its growth path using “hardware+software innovation to pull dollars away from others”. A report from Evercore Partners lowers its September quarter estimates, as iPhone 5 has started shipping only from September 21st and iPad Mini will not be launched this quarter. The report says “For its Sep-qtr, amidst multiple products cycling, we modestly trim our revs/EPS estimates to $36.5B (+29%Y/Y) and $9.03 (+28%Y/Y) from $37.5B/$9.28 but stay above consensus $36.4B/$8.93”. The estimates for the December quarter and 2013 was left unchanged at $1 above consensus EPS.
The report from Evercore Partners trims its iPhone estimates for the September quarter to 27 million from 28 million, mainly due to supply constraints, but backed by huge demand, the December quarter estimates of 49 million devices were left untouched. The report also lowered its estimates on iPads to 17 million from 18 million earlier, due to “some inventory burn into impending iPad mini launch”, and for the December quarter, it estimates 26 million iPads, including 17 million iPad Mini.
Michael Mauboussin: Here’s what active managers can do
The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More
On Mac units, the report lowered its previous estimate of 5.2 million to 4.9 million, “but with that still enough for a 26th consecutive qtr of PC market share gain”. On iPod’s, it says, “We continue to est 5.7mil iPods (-14%Y/Y) ahead of new 4-inch iPod touch and 2.5-inch iPod nanos now since launched for the Dec-qtr”.
Basing on Apple Inc. (NASDAQ:AAPL)’s previous performance, the report noticed that the company performs 2.2 times better in the quarters following the reported supply constraints in iPhone, and 1.2 times when iPads are constrained, “we see potential for great setup into Sep/Dec qts given iPhone 5 and impending new iPad mini, BOTH likely constrained right through Dec”.
iPads are following the same strategy as was used by Apple Inc. (NASDAQ:AAPL)’s iPods, of targeting category dominance via multiple price tiers, while “iPhone has followed the Mac model of only creaming off the most profitable high end of a massive commodity market”. Apple Inc. (NASDAQ:AAPL) is expected to ship about 72 million iPads in 2012, which is 77 percent more than last year, and for 2013, shipments are expected to increase by more than 52 percent, to 110 million. With such numbers, iPads will be more than 20 percent of the size of the traditional PC market in 2012 and more than 30 percent of the PC market in 2013.
About the new iPad Mini, the report expects it be a major revenue generator for the company “Apple’s new smaller lower-COGS, non-retina 7.85-inch thin/light iPad “mini” (intro Oct 23 for sales ramping into Nov) as a key milestone, since we see an expected <$300 starting price-point, setting Apple Inc. (NASDAQ:AAPL) up to keep dominating the thin-client tablet space it pioneered”.