“Barclays Capital’s Ben Reitzes this morning dips into the outlook for capital spending, writing that it may imply revenue above Street consensus,” Tiernan Ray reports for Barron’s.
“The Street is modeling $139 billion in revenue for Apple this fiscal year ending next September,” Ray reports. “Apple projects it’ll have capital spending of $8 billion this year, up from $4.6 billion last year.”
Ray reports, “Apple has lately been increasing spending as a percentage of revenue, with spending last fiscal year rising to 4% from 3% in the years 2006 to 2010. So, Reitzes opines that if Apple were to increase its ‘capex-to-revenue ratio to 5% in FY12, based on its capex guidance it would still imply an FY12 revenue figure of close to $160 billion.'”
Read more in the full article here.
Everyone is copying Horace Dediu’s insights at Asymco.com
Finally!
That is total guess game that has nothing to do with Apple’s revenues. For example, building a giant solar power plant is a huge capital spending for the current FY, but there is no connection to revenue whatsoever.
I mean, seriously, these analysts can take any random balance sheet figure and calculate any result with that. One analyst might see that FY2012 sales will be $80 billion, and the other $160 billion — this is the kind of nonsense they are engaged in.
Derss, you might want to back off a bit. There is a direct correlation between caper and revenue, as it relates to Apple.
Many of us (who spend more than a passing moment looking at Apple’s 10Q) have noticed this correlation. Reitzes is one of the more astute analysts covering Apple, even if his estimates seem overly conservative. His caper generated revenue estimate is much closer to that of The Mac Observer’s Apple Forum amateur analysts estimates. Those estimates, by the way, are always much closer to actual earnings than produced by WS professionals.
There was correlation, but the increase of capital expenditures in FY2012 is far beyond pattern, tied with few specific one-time projects like building giant solar power plant.
So trying to use pattern of the past to prognose revenue is useless; no relation this time.
Indeed, the more mushrooms Apple sells, the more revenue Apple collects…
Wouldn’t the new campus be part of the capex?