Apple Inc. (AAPL) Earnings Preview: Gene Munster Lays Out Everything

Apple Inc. (AAPL) Earnings Preview: Gene Munster Lays Out Everything

Apple Inc. (AAPL) Earnings Preview: Gene Munster Lays Out Everything

Apple Inc. (NASDAQ:AAPL) is reporting Q4 earnings after the bell today. All eyes will be on how the company with the largest market capitalization in the United states. What is an Apple earnings preview without ‘Apple guru’, Gene Munster?! We highlight all of Gene Munster’s earnings preview below:

AT&T September Quarter iPhone Activations Another Positive iPhone Read For Apple.

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AT&T Inc. (NYSE:T) reported September quarter iPhone activations of 4.7 million, up 27% q/q from June. For Apple Inc. (NASDAQ:AAPL), we are modeling total iPhone sales to be down 4% q/q. Munster notes that like Verizon Communications Inc. (NYSE:VZ), AT&T’s activation numbers are sell-through and Apple’s are sell-in, but believe they are relevant to look at together.

If you net out the roughly 1.3m iPhone 5s he believes AT&T sold based on comments from their earnings call, it results in activations of 3.4m non-iPhone 5s, down 8% q/q and similar to the down 9% from Verizon’s report. Munster notes that Piper Jaffary  expected non-iPhone 5 sales to be down 35% q/q, thus it continues to appear that non-iPhone 5 sales may not have been as bad as expected. The bottom line is that he is increasingly comfortable with the 25 million September iPhone estimate.

But….  a Note On Channel Draw

Munster remain confident in our 25 million expectation, but notes that channel draw may prevent upside despite strong carrier activation numbers. Apple Inc. (NASDAQ:AAPL) typically has a draw in inventory the quarter ahead of a new product launch.

He notes that since there was no stock of iPhone 5s with which to fill the channel, the situation may have been more exacerbated than we have seen in prior launch quarters.

Last quarter, Apple Inc. (NASDAQ:AAPL) had a 300k unit draw on inventory and he believes the company could draw down another ~250-750k units in the September quarter, which would provide a headwind to the actual reported iPhone number.


AT&T posted a stronger than expected iPhone number in the September quarter, following the trend started with Verizon last week. The company activated 4.7 million iPhones, which is up 27% q/q. About 1.3 million of those activations appear to be iPhone 5’s, suggesting that the US received close to half of the initial 5 million allocation of iPhone 5’s from Apple.

While Munster remains comfortable with his 25m iPhone estimate, he notes that early activation numbers from AT&T and Verizon suggest potentially stronger sales of non-iPhone 5s than previously expected.

Overall, he believes expectations for the September quarter are achievable following the company’s iPad “pre-announcement” of ~15 million units in September.

Munster expects Apple Inc. (NASDAQ:AAPL) to report earnings per share of $8.38, and $43.87 for Fiscal year 2012. He estimates revenue of $155.025 billion for the fiscal year of 2012, and $34.483 billion for the fourth quarter. The street expects Apple to report Q4 EPS of $8.75 and revenue of $35.802 billion.

Munster keeps his price target for Apple Inc. (NASDAQ:AAPL) at $910 a share.

Disclosure: No position

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