Q1 Preview: All Signs Point to Easy Win for Apple (AAPL)
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Price: $445.15 +0.68%
Rating Summary:
52 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
52 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade AAPL Now!
Shares of Apple, Inc., (Nasdaq: AAPL) are lower Tuesday, heading into the media and tech behemoth's highly anticipated first-quarter 2012 report.
Currently, the Street is at revs of $38.85 billion and earnings of $10.08 per share, both numbers stronger than Apple's issued guidance calling for revs of about $37 billion and EPS of $9.30 issued with its last report.
Shares of Apple gained 5.2 percent in the quarter, to $405 at the end of December. Shares are 4.5 percent higher since then, and gained 25.6 percent in 2011.
One of the biggest factors heading into results is unit sales for Apple's iPhone 4S. When the device was initially announced it was met with some resistance from the masses who were expecting a sleeker, sexier, more powerful device...the iPhone 5. But, as the saying goes, a rose by any other name...and so on. Needless to say, the iPhone 4S was met with warm reception, and sales are expected to easily top 30 million units in becoming the best-selling iPhone yet.
If investors need more proof, just look at Verizon's (NYSE: VZ) latest quarterly results. Though Verizon doesn't break it down with the general earnings release, costs of services and sales rose from $10.61 billion in 2010s fourth-quarter to $12.09 billion in the most recent period. That number is up 6 percent over the last quarter, when costs were at $11.40 billion. Reasoning is due in part to the subsidies that carriers -- like Verizon -- offer to trim the costs of buying a new smartphone -- like an iPhone -- in hopes that service revs will make up for the deficit in the long haul. With Verizon's costs overall increasing, that means it probably sold more smartphones in the quarter, and plenty more iPhones.
So how many could Verizon have sold? Well, in early January, the number of 4.2 million devices was rattled off. AT&T (NYSE: T) previously said a number in the 6 million range would be appropriate. It was also recently reported that in terms of subsidies, Verizon is estimated to kick-in $350 per iPhone 4S, AT&T is at $375, and Sprint gives $400 per unit.
Oh, and Apple probably sold a lot of iPads, iPods, and Macs as well. Some speculate -- and these are a bit generous compared with Wall Street analysts -- that Apple moved 15.5 million iPads, 5.10 million Macs, and 14.3 million iPods.
Current data from Bloomberg has 50 analysts with a Buy rating on Apple, 6 are at Hold, and 1 maintains a Sell rating. The Street's price target average is $515, with a low of $450 and high of $666. Apple has traded within a range of $310.50 to $431.37 over the last 52-weeks, indicating a bullish position for the price target average.
Analyst Comments
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Currently, the Street is at revs of $38.85 billion and earnings of $10.08 per share, both numbers stronger than Apple's issued guidance calling for revs of about $37 billion and EPS of $9.30 issued with its last report.
Shares of Apple gained 5.2 percent in the quarter, to $405 at the end of December. Shares are 4.5 percent higher since then, and gained 25.6 percent in 2011.
One of the biggest factors heading into results is unit sales for Apple's iPhone 4S. When the device was initially announced it was met with some resistance from the masses who were expecting a sleeker, sexier, more powerful device...the iPhone 5. But, as the saying goes, a rose by any other name...and so on. Needless to say, the iPhone 4S was met with warm reception, and sales are expected to easily top 30 million units in becoming the best-selling iPhone yet.
If investors need more proof, just look at Verizon's (NYSE: VZ) latest quarterly results. Though Verizon doesn't break it down with the general earnings release, costs of services and sales rose from $10.61 billion in 2010s fourth-quarter to $12.09 billion in the most recent period. That number is up 6 percent over the last quarter, when costs were at $11.40 billion. Reasoning is due in part to the subsidies that carriers -- like Verizon -- offer to trim the costs of buying a new smartphone -- like an iPhone -- in hopes that service revs will make up for the deficit in the long haul. With Verizon's costs overall increasing, that means it probably sold more smartphones in the quarter, and plenty more iPhones.
So how many could Verizon have sold? Well, in early January, the number of 4.2 million devices was rattled off. AT&T (NYSE: T) previously said a number in the 6 million range would be appropriate. It was also recently reported that in terms of subsidies, Verizon is estimated to kick-in $350 per iPhone 4S, AT&T is at $375, and Sprint gives $400 per unit.
Oh, and Apple probably sold a lot of iPads, iPods, and Macs as well. Some speculate -- and these are a bit generous compared with Wall Street analysts -- that Apple moved 15.5 million iPads, 5.10 million Macs, and 14.3 million iPods.
Current data from Bloomberg has 50 analysts with a Buy rating on Apple, 6 are at Hold, and 1 maintains a Sell rating. The Street's price target average is $515, with a low of $450 and high of $666. Apple has traded within a range of $310.50 to $431.37 over the last 52-weeks, indicating a bullish position for the price target average.
Analyst Comments
- Goldman Sachs is modeling earnings of $9.94 and revs of $31.18 billion. The firm is positive into numbers, saying "Apple is set to report a healthy December quarter."
Goldman believes iPhone sales will be 31 million units, iPads of 13.4 million, iPods at 14.6 million, and Macs of 5.02 million. On the iPhone, Goldman comments, "While we believe much of this quarter’s momentum was driven by demand for the new iPhone 4S (and Siri in particular), we also believe Apple’s new $0 post-paid iPhone 3GS price triggered substantial demand elasticity and will likely expand the installed base significantly in 2012."
For the iPad: "after last quarter’s iPad unit shortfall, we believe investor expectations for this segment remain restrained. Indeed, 2012 expectations may now be too conservative, as we expect a late March quarter iPad refresh and lower price points to reinvigorate iPad demand and push consensus estimates higher in coming months."
Apple's Mac share should be unabated despite the weaker PCs sales environment. Goldman sees iPods accounting for just 4.2 percent of overall revs, and becoming less and less a part of the overall story.
- Deutsche Bank is modeling earnings of $10.00 and revs of $38.8 billion. These numbers may seem conservative -- Deutsche Bank's own words -- given that their model accounts for iPhone sales of 28 million units, 5.0 million Macs, 14.0 million iPads, and 15.6 million iPods.
Commenting the numbers, Deutsche said, "Our iPhone unit estimate is particularly conservative and our upside scenario analysis suggests units could be as high as the mid-30Ms range. We also expect gross margins to beat (DB est 40%) due to weak commodities and a mix shift towards the higher margin iPhone." Specifically, on the iPhone the firm said, "We believe there were 3 key drivers of strong iPhone demand: 1)
pent-up demand leading into the Q, following a demand pause ahead of the iPhone 4S launch; 2) seasonal uptick due to the holiday season; and 3) carrier expansion (e.g. Sprint)."
- BGC Partners expects earnings of $11.00 and revs of $40.0 billion, basically expecting a big quarter for Apple. Wait, here's what BGC said, "We expect a big quarter from Apple, and we expect most investors expect a big quarter from Apple. Our pet fish expects records from Apple. Record Revenue. Record Earnings. Record iPhone Sales. Record iPad Sales. Record Macintosh Sales."
BGC expects iPhone sales of 32.5 million units, iPads of 12.8 million, iPods of 13.0 million, and Macs of 5.3 million.
Despite the bullish comments, BGC has some reservations into the quarter, recently moving their rating on Apple to a Hold. The firm cites competition from Android tablets, the late launch of iPhone 4S in China, a drop in iPod sales, and strength from rival Samsung.
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