Apple Inc. (AAPL) Q4 Earnings Preview: Handsome Harvest?

Apple Inc. (AAPL) Q4 Earnings Preview: Handsome Harvest?
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Apple Inc. (AAPL) Q4 Earnings Preview: Handsome Harvest?

All eyes are on Apple Inc. (NASDAQ:AAPL) earnings as the tech giant is expected to announce its Q4 results later today. Apple launched the iPhone 5 towards the middle of last month, or better still, at the close of Q4, while two days ago, iPad mini was unveiled. In the mix, of these major announcements, there was also updates in iPod devices lineup, as well as, the iMacs, among others.

However, just like any other refresh period, Apple Inc. (NASDAQ:AAPL) faced headwinds after launching its new products. First of all, there was criticism from competitors and customers over its Maps app, and iPhone 5’s compatibility with other gadgets. Additionally, supply chain constraint in meeting the overwhelming demand for the new iPhone 5 forced the company to defer some of its sales to Q4.

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Notwithstanding, Apple Inc. (NASDAQ:AAPL) is expected to deliver the goods as always, they may not be as flattering, but still, should be showing some great improvement, as compared to Q3. And, just as usual, analysts have placed their bets on what they expect from the world’s most valuable technology company Q4 earnings results.

BGC Financial, analyst, Colin W. Gillis, estimates Apple Inc. (NASDAQ:AAPL) to report $35.7 billion worth of revenues for the September quarter, which is 26.6% growth as compared to last year’s Q4, and 2.2%, higher than 3Q2012. Earnings per share for the quarter is estimated at $9.06 per share, while up from the $7.05 realized last year, it will be a decline for qoq figures, as compared to $9.32 posted in Q3.

Apple Inc. (NASDAQ:AAPL) C3Q12, also represents the company’s results for its fourth fiscal quarter, which should also mark the end of its current fiscal year. Therefore, this is harvest time, and despite the fact that it has come a little bit early for some of the products, Gillis has revised his estimates upwards, albeit slightly, with the form now expecting Apple to report a full year EPS of $44.53, as compared to the initial estimate of $43.81 per share. While full year revenues for 2012 have been revised to $156.3 billion, up from $155 billion.

Nonetheless, BCG’s revenue estimate is mildly below the consensus estimate, which is at $156.5 billion, whereas its EPS is more than the consensus estimate of $44.36 per share. The firm also increased its 2013 estimates for the iPhone maker to $185.4 billion in revenue and $48.24 EPS.

iPhone Sales

BCG expects Apple Inc. (NASDAQ:AAPL) to report approximately 24.5 million units of iPhone sales, at an average selling price (ASP) of $640 per unit, representing 44% of the company’s revenue, and a similar rate for the YoY growth in sales volumes, for the company’s highest revenue generator. However, the unit is expected to report a decline of 6% QoQ, due to the impact of supply chain constraints, as well as a slowdown in demand, related to anticipation of the new iPhone 5.

iPad Sales

Gillis expects Apple to ship at least 15.5 million units for the September quarter, at an ASP of $610, representing 26% of total revenue, and a 39% increase in volumes YoY, but a decline of 9% QoQ. On the other hand, the equity analyst is expecting 6 million units of iPod sales, at an ASP of $165 per unit.

Finally, the analyst expects Apple Inc. (NASDAQ:AAPL) to ship approximately 1.5 million units of Mac Desktops, and 3.6 million laptops in Q4, following the slowdown in the PC industry, as cannibalization from tablets continues to intensify.

BCG’s Gillis has downgraded Apple Inc. (NASDAQ:AAPL) to Hold, and slashed its price target to $600 per share, as compared to the current market price of $616 for the iDevices maker’s stock.

The analyst said:

“We are concerned about; the erosion in gross margins, the impact of channel inventory, a possible slowing in demand in China, lower priced competition, and expectations running ahead of the market. We also remain concerned on a negative impact of channel inventory on September quarter results”.

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