Apple (AAPL): Apple could report disappointing F4Q09 revenue, according to checks - Oppenheimer

October 16, 2009 7:29 AM EDT

From Notable Calls

Oppenheimer is out with a potentially venomous call on Apple (NASDAQ: AAPL) saying they Apple could report in line to slightly disappointing F4Q09 revenue ($9.0B-$9.2B) and would keep some powder dry to buy shares following the print, rather than ahead of it.

The focus of their concern is the iPhone. While demand for the product appeared to run ahead of firm's 6M unit target, they believe component/manufacturing hiccups may have prevented Apple from fully meeting demand during F4Q09. They'd use any pull-back as an opportunity to aggressively accumulate additional shares ahead of several near-term catalysts: a potentially gargantuan December quarter for iPhone (assuming no further component issues); re-acceleration of Mac growth with the release of the new MacBook and iMacs; and the likely announcement of the tablet in early 2010.

The first hint of trouble for the iPhone surfaced during the iPod event on Sept. 9, when Apple implied that ~3.5M phones had been sold with only 21 days left in the quarter. Subsequent checks showed the iPhone 3GS sold out in many markets. Something was clearly preventing Apple from shipping to demand.

- Recent carrier surveys suggest the supply constraint has eased. But it's difficult to judge when the bottleneck was resolved, or how many iPhones might have shipped in the final 21 days of the quarter. Consensus estimates imply that 3.5M phones flowed out to customers in the final weeks of 4Q09, which may be too aggressive.

- With demand for the iPhone apparently outstripping supply, December could be a substantial catch-up quarter, both in terms of sell-through and channel replenishment. Barring any additional component or manufacturing disruptions, Oppenheimer believes their 8M unit assumption for F1Q10 could prove conservative, especially given the iPhone's expanding carrier footprint.

- On Mac, they believe upside potential relative to the consensus range of 2.7M-2.8M units is limited, as persistent chatter about a new MacBook and iMacs likely delayed some purchases. Oppenheimer believes F1Q10 YoY growth rates will be significantly more impressive than for F4Q09.

- On gross margin, they expect Apple to significantly outpace consensus on a GAAP basis (they're at 37.3%), as a result of higher iPhone mix and a strong software contribution. Non-GAAP gross margin is likely to be only slightly above the consensus 40.3%—if iPhone caution proves true.

Notablecalls: Wow, calling a potential miss for Apple (AAPL) this is a bold statement from Oppenheimer's Tech/Applied Tech team!

INTC, IBM etc have sold off on pretty stellar (well, at least seemingly stellar) quarters so you would imagine the reaction when Apple actually misses on revs. When was the last time that happened? 4 years ago? Intstant -10-15pts in the cards?

This is a major (sentiment) negative for the stock here, I suspect. Supply issues or not, AAPL's current valuation is not built for that here.

I think we will see some hefty early downside in AAPL stock once the call starts to circulate the trading desks.

I see 3-5 pts of downside today if the market cooperates.

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