Macs, iPhones to be focus of Apple earnings report

“Apple Inc.’s outlook for iPhone sales and the ability to exceed its own earnings forecast will be under scrutiny when the company delivers what is expected to be one of the most-anticipated earnings reports of the quarter on April 23,” Rex Crum reports for MarketWatch.

“In January, Apple set a negative tone for the quarter when it forecast earnings of 94 cents a share on revenue of $6.8 billion, figures that fell well Wall Street analysts’ consensus estimates at that time,” Crum reports.

MacDailyNews Take: Yeah, Apple only forecast 29.3% year-over-year growth in Q2 08. How negative. Yes, we’re fairly dripping sarcasm.

Crum continues, “The company saw its shares fall 11% in one day after giving that forecast.”

MacDailyNews Note: Please see related article: Analyst: Apple was going down to $130 no matter what results they posted – January 22, 2008

Crum continues, “Analysts surveyed by FactSet Research currently estimate that Apple will earn $1.11 a share on $6.97 billion in sales for the quarter.”

“Analyst Shebly Seyrafi of Caris & Co. wrote in a research note that he expects Apple will beat the consensus forecasts, as well as his own estimates for earnings of $1.12 a share and sales of $7.04 billion. Seyrafi believes that the Mac, with its high gross margins, will be a factor in helping Apple exceed Wall Street’s outlook,” Crum reports.

“The analyst added that iPhone unit sales “will be a key focal point,” given the reports of widespread shortages of the devices,” Crum reports. “Along with larger than expected demand, Seyrafi said the smaller number of available iPhones could be tied to Apple trying to clear out inventories ahead of a 3G iPhone launch.”

Full article here.

The multi-billion dollar questions are, of course, not by how much Apple will beat The Street this quarter, but what will Apple guide for the next quarter?

The analysts’ consensus estimates for Q2 08 are $1.06 EPS on $6.95 billion in revenue vs. Apple’s guidance of $0.94 EPS on revenue of “about $6.8 billion.”

For Q3 08, analysts expect $1.10 EPS on $7.14 billion in revenue.

16 Comments

  1. Wall Street loves to punish any less-than-stellar outlook. Since Apple is in the habit of providing conservative forward numbers, there is a history of stellar reports followed by a drop on outlook. I’ve said it before and I’ll say it again: Apple should get out of the business of sharing outlooks.

  2. and here is my multi-thousand dollar question: i have to sell 100 shares (need some cash). sell it on monday or wait for the earnings day? (and risking apple’s once again super conservative guidance being “too low” for the clueless analysts.)

  3. @ralph from berlin – If we knew with any certainty, we’d all be billionaires by now. Good luck with that. If I had to guess, I’d say Macs are selling well and the numbers should impress, but a stumble could be devastating because the street is punishing.

    As for the analysts, it’s always a funny game that catches up with them around earnings time. Notice how the gloom and doom has subsided just before we get to see the real numbers. We’ve seen a few downgrades recently, I’m curious how those will hold up against the numbers.

  4. @ralph
    While there is a chance that Apple won’t see the typical post report sell off, I find it a good policy not to attempt to get every last dollar out of run-up. As long as you’ve got a profit, secure it, be happy with, and don’t worry if you’ve left a little for the next guy. As long as you’ve HAVE to sell those 100 shares, lock in your profit, say thank you, and don’t sweat whether it goes up or down after the fact.

  5. Especially after the week we just had. It seems like usually when aapl is up several dollars for a few days, there is some profit-taking or punishment or something that brings it back a bit. I agree…sell Monday morning.

  6. @ralph from berlin

    A sell stop will not work if aapl gaps down (see bsc (Bear Sterns)). If you need the money then sell. If you can chance a 10% haircut then wait. I have seen aapl go down on better than expected earnings and “The Street” was unhappy because the guidance had proven lower than actual earnings. Of course I know there is no one named “The Street” and I recognized this as a euphemism for manipulation, but be that as it may, I always sell if I need cash and do not wait for earnings dates unless the possible haircut will not affect my ability to cover cash flow.

  7. Why not start the first day of the next quarter right by announcing the iPhone Tuesday morning…will save the tons of questions about it during the conference call and will negate any negation of AAPL, regardless of
    how good or how bad the results are. If only it would go up 89.87 like GOOG did today. RIMM’s went up over 30 one previous quarter…why does AAPL always good results always end up mediocre??

  8. thanks for the good advice, guys. will be selling monday morning. as of buying puts to secure the whole portfolio (1200 shares) i am still clueless (though i know i have to do it and it would have been a good idea in the last jan-march downturn!) because i simply don’t know which of the thousand puts on apple i should buy. think i need some professional help here.

  9. @ralph from berlin

    Just remember, don’t feel bad if it goes up, don’t feel good if it goes down, just be happy you have the $$$ you need for whatever it is you plan to do.

    BTW:

    Forget buying put or call options. They are sold as “insurance”, but what really happens the vast majority of the time is that you have a NON-REFUNDABLE premium for an option that will, I repeat, in the vast majority of the time, expire WORTHLESS.

  10. @ralph from berlin , you could buy 12 October or July 160 puts to protect and pay for it by selling 12 July or October 180 calls. This gives you a collar position that if you wish to hold on to your assets you can roll the options to the next strike prices as the stock moves up as the price as the stock moves up. In the mean time if the stock trends up sell 10 contracts of May 150 to 155 puts and limit potential losses by buying May 145 to 150 puts. this allows you to collect a premium on the puts sold and limits your loss to a maximum of $5000 if the market moves against against your position before the spread can expire on Friday 5/16. You collect the differential between the cost of the 150 -145 puts or the 155-150 put times 1000 or about $1330 for the first spread or $1760 for the second spread.

  11. @ ralph from berlin
    I rest my case.

    @bobchr
    “limits your loss to a maximum of $5000”

    But “ralph from berlin” needs the money now! The main issue here is not to protect the asset between now and 3 weeks from now, but weather to use it now or friday.

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