Analysts raise estimates on Apple Q4 results
updated 09:55 am EDT, Tue October 20, 2009
iPhone remains key driver
Apple did extremely well in its fiscal fourth quarter, say analysts with Needham and UBS. Needham's Charlie Wolf describes 7.4 million in iPhone shipments as "especially impressive," given that the device still has a fairly new install base. Wolf estimates that approximately 5.5 million of the units are fresh activations, rather than upgrades.
Also said to be impressive is a 17 percent growth in Mac units, led by a 35 percent rise in notebook sales. Aside from surpassing the "anemic" growth of the rest of the computer market, the figure is believed to be a sign that Mac sales continue to be fueled by the iPhone and iPod halo effect. Substantial price cuts are not needed to keep Mac sales going, Wolf claims.
Maynard Um of UBS remarks that he expects recurring iPhone revenues, based on an expanding install base, the pull of the App Store, and new carrier partners. He further proposes that the company may eventually provide a service with seamless access to digital content across all of its products.
Um calls for $12.5 billion in revenue for the December quarter, with at least 9.8 million in iPhone shipments. In the long-term he is raising his price target from $265 to $280, and his FY10 GAAP/pro forma EPS estimates from $7.70/$11.09 to $7.84/$11.68. FY11 figures are being shifted from $8.89/$11.64 to $9.18/$12.03. Wolf is holding to a $235 price target, but raising his 2011 GAAP EPS prediction from $6.70 to $7.30.
I think you meant Q1
10/20, 11:27am reply
I think the title of this post should be
Analysts raise estimates on Apple Q1 results
Apple just finished Q4 so raising estimates now wouldn't be so useful.
Apple's Q1 is October - December.
sfmitch
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Joined: Mar 2008
@sfmitch
10/20, 11:35am reply
no, what they meant was they are raising their estimates based on (upon) Q4.
Probably poorly expressed, but headlines are typically not 100% grammatically correct due to space considerations.
climacs
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Joined: Sep 2001
more high expectations
10/20, 11:42am reply
it's amusing how this works:
Apple issues conservative estimates
Wall Street has come to expect results higher than Apple's estimates
Due to Apple consistently beating Wall Street's higher estimates, AAPL consistently has very high expectations for earnings built into its stock price.
So in order for Apple to meet those expectations and continue to run up its stock price, it has to consistently way outperform even the heightened expectations of Wall Street analysts.
If Apple 'merely' meets Wall Street expectations, you'll typically see a significant drop in the stock price after earnings are announced, as short-term investors sell off to cash in on the price which was based upon sky high expectations that were not met. Then the stock price bounces back shortly thereafter as medium- to long-term investors take advantage of the dip in price to get in for the next run-up.
I still think Apple is overpriced given their current (excellent) results, but there are so many expectations for better-than-excellent earnings results built into the price, and Apple keeps meeting or exceeding those expectations so the inflated price is 'correct' so long as that continues.
Welcome to Investing In High-Tech Stocks 101. Frightened yet? ;-)
climacs
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Joined: Sep 2001