Chuck Jones: Apple’s Q312 guidance could cause substantial drop in share price

“Apple (AAPL) is scheduled to release its March quarter results on Wednesday, April 23, and if it maintains its usual practice, will provide guidance for the next quarter in its press release,” Chuck Jones writes for Seeking Alpha. “While I am not very concerned about Apple hitting investor expectations for the March quarter, I am very concerned about guidance.”

“After running my Apple model for the June quarter and comparing it to the Street projections for revenue and EPS, I believe that the company’s guidance could be significantly below expectations, which could lead to a substantial drop in the shares post-earnings,” Jones writes. “The Street is currently estimating June quarter revenue of $38.3 billion, which has come down slightly from $38.7 billion two weeks ago. The $38.3 billion is an 8.5% increase from last year’s $35.3 billion result… When I do my bottom-up revenue projection based on unit sales and average selling prices for iPhones, iPads, Macs, iPods, iTunes and Accessories, my June quarter revenue estimate is $33.7 billion. Therefore, it would not surprise me to see the mid-point of guidance at $34 billion, with a range of $33 to $35 billion.”

“I don’t believe enough investors fully appreciate the potential downside to the guidance range that management may give,” Jones writes. “I don’t think the company can increase its dividend enough to offset a guidance shortfall, since it is limited by the amount of U.S. cash it generates on a yearly basis. If it does announce a larger buyback program with some positive verbiage about new products, it may limit what I believe could be a downdraft in the shares the day after earnings are announced. The other areas that could offset my concerns would be China Mobile kicking in faster than expected, recently lowered iPhone prices overseas driving incremental sales but not hurting gross margin too much, management ‘knowing’ that the iPhone 6 could ship in the June quarter and including its sales in guidance or gross margins staying healthy.”

Read more in the full article here.

Related articles:
Handicapping Apple’s quarterly earnings and revenue – April 21, 2014
Apple to webcast Q214 earnings release conference call on April 23rd – April 21, 2014


  1. “The Street is currently estimating June quarter revenue of $38.3 billion, which has come down slightly from $38.7 billion two weeks ago. The $38.3 billion is an 8.5% increase from last year’s $35.3 billion result… When I do my bottom-up revenue projection…”

    Stop you’re giving me a headache!

  2. Over the years, I have found that vast majority of Seeking Alpha articles to be too speculative and not vetted for accuracy. In other words, its not much more than someone pontificating his/her own beliefs using any data that may suit to support the biased position.

    This particular article provides no data and basis from which the conclusion or forecast for which Chuck Jones postulates. In addition, the headline title do nothing more than to install fear into those who are not knowledgeable or aware.

    It is my opinion that, Seeking Alpha is essentially a tabloid and should not be taken seriously unless the reader does diligence regards to the subject being written.

  3. No one really should give a shit what analysts say, in light of the fact Apple’s record breaking quarters and unheard-of-for-a-hardware-company profit margins also cause substantial drops in share price.

    1. I was thinking the same thing. This Chuck Jones is too much like the prematurely pompous, self-assured & card carrying “My name is Wile E. Coyote, Super-Genius – I like the way that rolls out” who finally disasterously realizes “My name is Mud.”

  4. I don’t have a lot of money to invest, and I have no Apple shares. But if there is a nice drop, I will become a first time Apple investor. Sounds like it could be great opportunity for first time Apple investors.

  5. Watch them scramble tomorrow am or they will downplay the news. China mobile will report at least 3 million in 4g sales. Mind you the analysts would want you to believe that the only buyers of iPhone are those subscribing to 4g. Millions are buying the iPhone for future proof even if they only have 3G. The iPhone now supports td-scdma which is china mobile’s 3G.

  6. AAPL has become predictable around earnings reports. Therefore if you are a SeekingAlpha author trying to boost your credibility, “predict” the predictable pattern and at least some new clientele will be impressed.

  7. Apple doesn’t guide on unannounced products. The iPhone 6, and any other new unannounced products will be left out of any guidance given tomorrow. I believe guidance will be characterized as “disappointing” tomorrow, and like nearly every other April earnings report in Apple history, the stock will drop. Therefor, I’m presently all cash. If I’m wrong I’ll be almost as happy as if I’m correct.

          1. Not all that well this time, but I’m now back in with a small loss. Consider it an insurance premium for not being vulnerable to what happened last time. It’s OK. The split and the fact that they blew away the WS predictions bodes well for the future. I’ll be holding for several months now.

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