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AAPL Stock: 102.99 ( + 0.52 )

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Apple expected to earn $.72/share on $5.3B

updated 06:40 pm EDT, Thu July 19, 2007

Q3 earnings expectations

In its third-quarter financial results, due on July 25th, Apple is expected to earn 72 cents a share on revenue of $5.29 billion, up from 54 cents a share on $4.37 billion in sales posted in the same quarter a year ago according analysts surveyed by Thomson Financial. In its second quarter, Apple announced revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share.

Though Apple likely moved between 500,000 and 1 million iPhones in the quarter, Gene Munster of Piper Jaffray thinks Apple will only recognize about $12 million in sales from the iPhone, meaning the device "will not be material" to Apple's results this time. As previously reported, Apple will recognize revenue for the iPhone (and Apple TV) on a subscription basis. The reason is that both the phone and media hub will receive a relatively steady amount of software features for free over their respective lifespans, meaning that the income from each sale in effect amortizes the software development costs after the product is released.

Analysts are also expecting Apple to have shipped 1.6 million Macs in the quarter.




by MacNN Staff

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Comments

  1. Fast iBook

    Joined: Dec 1969

    0

    Ode to Carl Sagan...

    This quarter apple made billions and billions of dollars, and next quarter apple hopes to earn billions and billions more, so apple stock soars proudly past competitors into the cosmos.

    Heck yah.

  1. AlenShapiro

    Joined: Dec 1969

    0

    yes but I thought...

    I thought Apple were going to get a cut of AT&T's subscription plan income. Surely that means the cost of software/firmware upgrades, over the course of the iPhone's lifetime are covered and Apple can recognize the income from the sale immediately - unless, of course, they'd rather not do so.

    ps IANAQuant

  1. Eriamjh

    Joined: Dec 1969

    0

    $140 a share, baby!

    Record effing high.

  1. maybesew

    Joined: Dec 1969

    0

    terrible research

    QUOTE Though Apple likely moved between 500,000 and 1 million iPhones in the quarter, Gene Munster of Piper Jaffray thinks Apple will only recognize about $12 million in sales from the iPhone, meaning the device "will not be material" to Apple's results this time UNQUOTE

    the phone came out June 29th at 6 PM. Also the day the quarter ended. Iphone sales will not effect this quarters earnings AT ALL.

  1. LouZer

    Joined: Dec 1969

    0

    Re: terrible research

    the phone came out June 29th at 6 PM. Also the day the quarter ended. Iphone sales will not effect this quarters earnings AT ALL.

    Not necessarily, since you don't know what sales they reported before 6pm. Apple had to send stock to the AT&T stores, which requires them to report it somehow as a sale. Also, due to the way the accounting rules require it, their own stores are technically separate entities, and thus shipments to them require mention on the ol' report as well.

    But keep in mind they're subscribing the stupid thing, so they wouldn't be recording all the sales anyway.

    I thought Apple were going to get a cut of AT&T's subscription plan income. Surely that means the cost of software/firmware upgrades, over the course of the iPhone's lifetime are covered and Apple can recognize the income from the sale immediately - unless, of course, they'd rather not do so.

    No, that's two different things. They're subscribing the hardware so they can more easily push new features out (supposedly, if you buy those lame "We need to charge for the 802.11n driver because its a new 'feature' excuse), not because of the AT&T deal. That money just comes in and gets recorded.

    And they probably want to subscribe (which basically means to spread out over a longer term) the iPhone/iTV sales just to keep the financial reports more level (no sense spiking it one quarter then watching it dive the next).

  1. Jonathan-Tanya

    Joined: Dec 1969

    0

    1.6 million macs

    If thats the number, that is a healthy number of Mac sales. It will be interesting to see that continue, and at what point that attracts more software to the platform. Although personally, I've been quite happy with Apple's own software, Adobe, and Oracle.... the more the merrier.

    I'll tell you what would really help, stop conceding the low cost tower market to the pc world.

  1. Terrin

    Joined: Dec 1969

    0

    Support

    The monthly cut Apple gets from AT&T is in part to finance Apple's support of the iPhone. AT&T generally covers support for its phones, but not so with the iPhone. It is also likely AT&T is paying Apple a bounty for new subscribers.

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