Apple’s Q113 earnings: Here’s what flew right over most analysts’, and nearly every reporter’s, head

“As predicted, the headlines reporting Apple’s (AAPL) quarterly earnings last week — and the market’s immediate and violent negative reaction — failed to take into account that Q1 2013 had one less week Q1 2012,” Philip Elmer-DeWitt reports for Fortune. “Even Tim Cook did lousy job explaining it.”

P.E.D. reports, “It fell to the Braeburn Group’s Robert Paul Leitao, an independent investor who writes a blog called Posts at Eventide, to put the situation into plain English: ‘Apple’s fiscal quarters are usually 13 weeks in length and always end on a Saturday. Every 5 or 6 years, depending on the number of leap days in the multi-year period, Apple adds a 14th week to its first fiscal quarter to align fiscal quarters closer to calendar quarters. On a weekly basis, Apple’s revenue was $4.2 billion in the recent December quarter versus $3.3 billion in the prior-year period. On an equal week basis, revenue in the quarter rose 26.7%.”

“What Leitao is too polite to mention is that the companies that make up the S&P 500 grew their revenue a comparatively anemic 3.8% in the same period, according to Capital IQ, and that without Apple’s contribution that growth would have been even lower,” P.E.D. reports. “Yet the trailing PE ratio of the average S&P stock is 17.5, and in the past week the market — driven in large part by computer algorithms that respond to ‘sentiment’ (i.e. headlines), not fundamentals — has pushed Apple’s trailing PE down to 8.6.”

Much more in the full article here.

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Apple’s results aren’t the total disaster implied by the market meltdown – January 24, 2013
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Apple CEO Tim Cook: ‘No technology company has ever reported these kinds of results’ – January 24, 2013
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Jim Cramer: ‘Without Steve Jobs, Apple is just another stock, it’s not magical anymore’ – January 23, 2013
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MacDailyNews presents live notes from Apple’s Q113 Conference Call – January 23, 2013
Apple reports record results: $54.5 billion revenue, $13.1 billion profit, $13.81 EPS – January 23, 2013


  1. More important than this is that Apple does not expect bigger than 5-10% sales growth for March quarter.

    Even if they will top their top expectations (for the first time, they not only announced their bottom expectations) — say, the revenue will reach $45 billion, higher than $41-43 planned, then still this will represent only 15% YoY growth.

    To really impress stock buyers Apple would have to show at least 20%, or, better, even higher growth. $50 billion sales would be good. But, as of now, there is no way to show that high growth.

    1. You need to consider PEG – price/earnings relative to growth. On that basis, AAPL was fairly priced at ~$700 for around 15% growth for a trailing P/E around 15. Instead, Apple achieved nearly 27% growth (justifying a larger P/E multiple), yet the stock tanked to a trailing P/E below 9. Yes, the market is insane.

        1. Let’s see, a consumer product maker says that, in the quarter after Christmas, they will have less growth than in the Christmas, spend til you’re broke, consumer madness quarter.

          And yet, you still think it means Apple is tanking in the second quarter.

          1. Lets do not confuse QoQ with YoY; investors compare YoY results, not QoQ, which are seasonable.

            And YoY results are promised to be flat, with only 5-10% growth, and flat net profits.

  2. To expect a huge company such as Apple to show 20% growth is asking too much. The absolute number of sales required would soon pass the entire size of the market.

  3. This morning, apple is $423.5 and Exxon is $414.8.
    So much for that hyped “apple lost its crown as most valuable company in the world”
    By the way, I have not see any news saying that but I did see many news predicting apple will lost its crown a few days ago and many other after apple was briefly below Exxon. Where are those “analyst” now?

  4. None of these expectations ever seem to take into account that even the same percentage growth would actually be an increase on a compound basis. Not to say that expectations shouldn’t be higher, lower, or whatever, but there seems to almost be an element of treating percentages as fixed amounts to an extent. In addition, growth is still growth, sometimes if the actual rate of growth doesn’t increase they treat companies as if they’ve stagnated. They’ve still gotten bigger.

  5. ” Even Tim Cook did lousy job explaining it.”

    Yup, that’s copied directly from the page. Read it again if you missed the “lousy editing job.” Who’s calling the kettle black?

    Here are the first three sentences of the first paragraph of the press release:

    “Apple® today announced financial results for its 13-week fiscal 2013 first quarter ended December 29, 2012. The Company posted record quarterly revenue of $54.5 billion and record quarterly net profit of $13.1 billion, or $13.81 per diluted share. These results compare to revenue of $46.3 billion and net profit of $13.1 billion, or $13.87 per diluted share, in the 14-week year-ago quarter.”

    Here is the entire second paragraph:

    “Average weekly revenue was $4.2 billion in the quarter compared to $3.3 billion in the year-ago quarter.”

    And since MDN’s notes on the conference call reflect that order and highlighting, I assume Tim read the press release (as has been the process for years) to start the conference call.

    Therefore, I can only surmise that Tim did a “fine job” explaining the differing week count, but that analysts were so hurriedly updating their spread sheets and web sites that they failed to *listen* to the details being given to them.

    And if I recall correctly, the Jan 2012 earnings call mentioned the week count difference for the Q1FY2011(13wks) YoY comparisons as well. So the analysts knew about this impact a year in advance.

    Has anyone seen an analysis of analyst expectations where 13/14ths of their expectations were compared to Apple’s actual results?

    1. Don’t confuse “Braeburn Capital” with “Braeburn Group” – the former is Apple’s investment arm, the latter is an unrelated group of investment analysts.

  6. Apple is buying back stock, now …..

    Last time Apple was cut in half, it took 18 months to recover …..

    This selloff was Apple specific rather than market specific ….. May take 2 years before we see $700 again …..

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