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Analysts revising estimates ahead of Apple's Q3 report

updated 05:00 am EDT, Tue July 17, 2012

Conflicting reports show a lack of consensus

Professional analysts are getting in their final set of predictions prior to the unveiling of Apple's fiscal third-quarter 2012 earnings next week, and inadvertently showing a lack of consensus in their views. Some are predicting the company to hit near-record highs for a third quarter, while others are cutting estimates amid reports of lower-than-expected sales in the US, in part due to the late-in-the-quarter introduction of refreshed notebooks and the supply constraints that accompanied them.

Apple has, however, beaten sales projections routinely for well over a decade, and is widely acknowledged to be the only company in the PC industry with a positive US growth rate currently. Asymco's Horace Dediu predicts a growth rate of around 15 percent year-over-year (YOY), with Mac sales growing slightly at over four million Macs. The real question, however, has little to do with Apple's Mac business; what analysts wish they knew for sure is how many iPads and iPhones the company has sold in the last three months.

Estimates on this point vary: longtime analyst Gene Munster now predicts 28 to 29 million iPhone sales, slightly down from previous predictions, while Wells Fargo thinks it could be around 35 million units and Mizuho Securities predicts 27 million. Apple itself has guided expectations down slightly from last quarter, but it is widely expected that both Mac and iPad sales will actually grow, the latter rising significantly as word-of-mouth about the quality of the latest iPad continues to spread.

One of the biggest factors is China and other developing markets. The entire Asia-Pacific region but particularly China has seen a lot of growth, but the lack of the new iPad in China (which was delayed until the settlement of the Proview litigation) is bound to have hurt the company in that area, but may show pent-up demand and strong sales in the Q4 results this fall. The average consensus is that Apple will sell between 15-20 million iPads, showing slight growth from last quarter but roughly double the number Apple sold at the same time a year ago. The most upbeat on iPad sales is Dediu, who pegs sales at 24 million, while Keith Bachmann at BMO Capital believes it could be nearly half that number (13 million).

The guesses at iPhone sales also vary widely, with some analysts believing that the market has already started to decline in anticipation of the "iPhone 5" expected sometime in the fall. Traditionally, however, iPhone sales only start to drop off very close to the actual launch, and could be an area that surprises analysts. Apple sold 35 million iPhones in the previous quarter and the consensus estimates are well below that, at around 29-30 million.

Seeking Alpha's Stephen Rosenmann, however, is having none of it. He thinks that Apple will report figures generally in line with its exceptional holiday-season record sales in fiscal Q1, and predicts Apple to sell a total of 63 million devices (computers, iPods, iPhones and iPads combined, which could break out as 35M iPhones, 20M iPads, 4.5M Macs and 3.5M iPods). Rosenmann points out that Apple's third-quarter revenues have beaten second-quarter earnings for the last nine years. While many analysts are hedging their bets downward, some of the ones with the most accurate track record -- like Dediu and Robert Leitao of the Braeburn Group -- have raised their estimates (albeit still conservatively).

Earnings estimates are equally variable, ranging from $37B to over $42B depending on who you ask, and EPS estimates range from a low of $10.19 (Baird) to $13.62, nearly the all-time record for the company (Rosenmann). Street consensus estimates call for a $10.38 EPS on revenues of $37.6 billion. The unusually large sweep for a Q3 estimate hints at uncertainly in how well Apple has been doing overseas, where trends are harder to accurately gauge, and which could be Apple's ace in the hole in lighten of the softening of domestic PC sales. [via Fortune]

by MacNN Staff



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