Apple's Q1 2009 Earnings Predictions
Apple will release their earnings for the first quarter of the 2009 fiscal year Wednesday afternoon. A number of reports circulating over the past couple of days lend some insight into what we might be able to expect.
AppleInsider discusses a report from Piper Jaffray analyst Gene Munster, who predicts based on data from research firm NPD that Apple sold between 2.45 million and 2.55 million Macs in the quarter for a gain of 6-10% over the year-ago quarter. Munster specifically points to an approximately 4% gain in year-over-year Mac sales for the month of December, rebounding from flat or slightly negative growth during November, as a positive sign. Munster also predicts iPod sales in the range of 19 million to 20 million units, above Wall Street's expectations of approximately 18.6 million units.
Fortune, on the other hand, contrasts Munster's view with that of Bernstein Research analyst Toni Sacconaghi, who views much of the NPD data negatively. The major difference between Munster and Sacconaghi's predictions, however, appears in their iPhone numbers, for which NPD does not provide data. Munster predicts quarterly iPhone sales of 6.4 million, while Sacconaghi predicts sales in the range of 3.5 million to 4 million.
The wild card that may be missed by many investors, as thoroughly described by Andy Zaky at Bullish Cross, is Apple's use of subscription-based accounting for iPhone revenue. The practice, which results in Apple recognizing revenue from a particular iPhone sale over the two-year term of the service contract, resulted in significantly lower revenue numbers for last quarter than would have otherwise been seen.
As Zaky points out (and Fortune summarizes), this discrepancy has resulted in Apple releasing two sets of earnings number, one "official" one calculated according to Generally Accepted Accounting Principles (GAAP) using subscription-based accounting of iPhone sales and one calculated using non-GAAP revenue recognizing each iPhone purchase entirely within the quarter in which the sale was made. Because most analysts base their reports on GAAP numbers, many are ignoring the impact of fractional revenue being carried over from sales made in earlier quarters. Consequently, while Q1 2009 most likely saw a decline in iPhone sales from the previous quarter, the impact of this decline on Apple's revenue numbers should be mitigated by this subscription-based accounting.
AppleInsider discusses a report from Piper Jaffray analyst Gene Munster, who predicts based on data from research firm NPD that Apple sold between 2.45 million and 2.55 million Macs in the quarter for a gain of 6-10% over the year-ago quarter. Munster specifically points to an approximately 4% gain in year-over-year Mac sales for the month of December, rebounding from flat or slightly negative growth during November, as a positive sign. Munster also predicts iPod sales in the range of 19 million to 20 million units, above Wall Street's expectations of approximately 18.6 million units.
Fortune, on the other hand, contrasts Munster's view with that of Bernstein Research analyst Toni Sacconaghi, who views much of the NPD data negatively. The major difference between Munster and Sacconaghi's predictions, however, appears in their iPhone numbers, for which NPD does not provide data. Munster predicts quarterly iPhone sales of 6.4 million, while Sacconaghi predicts sales in the range of 3.5 million to 4 million.
The wild card that may be missed by many investors, as thoroughly described by Andy Zaky at Bullish Cross, is Apple's use of subscription-based accounting for iPhone revenue. The practice, which results in Apple recognizing revenue from a particular iPhone sale over the two-year term of the service contract, resulted in significantly lower revenue numbers for last quarter than would have otherwise been seen.
As Zaky points out (and Fortune summarizes), this discrepancy has resulted in Apple releasing two sets of earnings number, one "official" one calculated according to Generally Accepted Accounting Principles (GAAP) using subscription-based accounting of iPhone sales and one calculated using non-GAAP revenue recognizing each iPhone purchase entirely within the quarter in which the sale was made. Because most analysts base their reports on GAAP numbers, many are ignoring the impact of fractional revenue being carried over from sales made in earlier quarters. Consequently, while Q1 2009 most likely saw a decline in iPhone sales from the previous quarter, the impact of this decline on Apple's revenue numbers should be mitigated by this subscription-based accounting.
Top Rated Comments
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40 months ago
I say Apple will do better if Jobs bows out. In the mean time, Sell Sell Sell.
That was the topic right?
That was the topic right?
40 months ago
It should be interesting to see these results as an indicator for Apple's performance in the downturn and the wider markets. If a company as successful and popular as Apple takes a big hit then others may fare much worse.
40 months ago
I predict that they earned a lot, if not a hell of a lot. I still have some regression curves to do, and my bank of MacPros is crunching the numbers as I type, but early indicators are pointing to Apple earning a hell of a lot.
40 months ago
I say Apple will do better if Jobs bows out. In the mean time, Sell Sell Sell.
That was the topic right?
I'm sure Clarence Beeks will be on the case.
40 months ago
We'll just file the Zaky article under "failing to see the bigger picture".
The point behind the subscription model was that updates would be free so as to encourage as many iPhone users as possible to be on the latest firmware and experience the phone as it was intended.
The point behind the subscription model was that updates would be free so as to encourage as many iPhone users as possible to be on the latest firmware and experience the phone as it was intended.
40 months ago
I say Apple will do better if Jobs bows out. In the mean time, Sell Sell Sell.
That was the topic right?
Are you crazy? Buy, buy, buy! The stock will no doubt go up in the future.
40 months ago
We'll just file the Zaky article under "failing to see the bigger picture".
Zaky sees the big picture, his article is pointing out that investors or potential investors should I say, are failing to see the big picture.
40 months ago
I suspect it'll be somewhere between 4-5M iPhones sold this quarter. Down from 7M (which was high due to built-up demand and a better financial situation). With good but not stellar Mac sales, showing slight growth, and strong iPod Touch sales - of which I hope they'll finally break out the #.
One of the most important things for Apple right now is growing its iPhone OS userbase - not just iPhone sale #s - but it'll probably take the Street another year or so to figure that out.
One of the most important things for Apple right now is growing its iPhone OS userbase - not just iPhone sale #s - but it'll probably take the Street another year or so to figure that out.
40 months ago
We'll just file the Zaky article under "failing to see the bigger picture".
The point behind the subscription model was that updates would be free so as to encourage as many iPhone users as possible to be on the latest firmware and experience the phone as it was intended.
The effect of the subscription model is that only one eighth of Apple's record iPhone sales in the last quarter were actually recorded as sales/profit in that quarter. This has two consequences: The official (GAAP) numbers for the last quarter were more than $2bn lower than they could have been without subscription model, and this quarters official numbers for the iPhone would be the same as last quarters, even if Apple hadn't sold another phone. If iPhone sales stayed the same, the official revenue numbers will be twice the number of last quarter.
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