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Apple's earnings "miss" more an issue with overzealous analysts
Apple reported its quarterly earnings earlier this week, and the results were lower than many Wall Street watchers expected (even though Apple beat its own revenue guidance by more than 12%). This miss was widely reported and Apple's stock took a hit -- AAPL dropped from above 420 before the announcement to under 400 on Thursday afternoon. But whose fault is this negative perception? Is it Apple's failure to perform this past quarter, or analysts' overenthusiastic predictions that led to this situation? According to Fortune contributor Andy Zaky, this foible is only a minor blip created by analysts whose predictions were off the chart. Zaky points out that Apple, in the past, has reported revenue that was about 12-18% above guidance. Analysts used this historical information and issued a consensus estimate that was 5-10% above guidance. That's how it worked. Analysts would predict on the lower side, Apple would earn on the higher side and life was good. This past quarter, though, analyst estimates had crept up to 18.8% ahead of guidance, while Apple's reported earnings were 13% above the company's guidance. Though Apple's earnings fell within the normal 12 to 18% over guidance, analysts got ahead of themselves and overestimated Apple's performance. And it's their own fault, says Zaky. Apple repeatedly warned analysts this was going to be a transitional quarter, but analysts failed to listen. [Via The Loop]
Apple posts record Mac quarter despite some iPad cannibalization
Along with the iPad, Mac sales were one of the highlights of Apple's quarterly earnings report. In the quarter that just ended, Apple sold 4.89 million Macs, a 26 percent increase over the year-ago quarter. Apple CEO Tim Cook was pleased about the Mac performance, but in response to an analyst question he did confirm that some customers are buying the iPad instead of the Mac. It's inexpensive and easy to use, two features that appeal to the average consumer. But Apple's computers are not as hard-hit by iPad cannibalization as the PC market. Cook suggested today, as he has in the past, that a far larger number of people are choosing to buy an iPad instead of a Windows PC (versus those choosing the iPad over a Mac notebook). Cook sees this as a growing trend and he said today he believes that the tablet market will someday eclipse the PC market. Considering that Apple currently has 3/4ths of all tablet sales, that's good news for the company's prospects.
iPhone sales dip last quarter largely due to rumors
iPhone revenues and unit sales for Apple's last quarter dropped significantly compared to the previous quarter. Revenues from iPhone sales declined by 18 percent, while unit sales dropped 16 percent -- a sell-through decline of 2.4 million units over the previous quarter. During the recent quarterly earnings call, CEO Tim Cook and other Apple executives confirmed the main cause of the decline: rumors. Apple believes the explosion of iPhone rumors during the latter half of the last quarter materially contributed to the decline in iPhone sales over the quarter. Coupled with pent-up demand for a new model of iPhone after Apple unexpectedly didn't refresh the line at WWDC, this amounted to a US$2.3 billion reduction in revenue from iPhone sales over the quarter. This is the first time that I can recall Apple publicly admitting the impact rumors have had on its bottom line, and that impact appears to have been substantial. Even Gizmodo's early outing of the iPhone 4's design failed to make much (if any) dent in iPhone sales in the quarter preceding the iPhone 4's launch in 2010, but endless speculation about a supposed iPhone 5 launch apparently drove customers to hold off on iPhone purchases in anticipation of a new model. The good news for Apple is that record-breaking sales of the iPhone 4S may have already offset its lost revenue from last quarter. With four million handsets sold in just the first three days after its launch, sales of the iPhone 4S are likely to drive Apple's holiday quarter iPhone sales beyond anything seen thus far. Whether the situation will repeat in 2012 is anyone's guess. The rumor mill is unlikely to stop churning, but hopefully next year it won't cost Apple so much in lost sales in the process.
Liveblog: Apple Q4 2011 earnings call
Thanks for joining us here for running commentary and analysis of Apple's Q4 2011 earnings announcement. We welcome your comments and questions, but please note that questions are moderated and will not necessarily appear in the liveblog content; also please note that TUAW cannot ask the Apple executives questions, as the call is reserved for financial analysts. You can also listen in on the live earnings call via QuickTime streaming.
Apple reports Q4 2011 earnings
After the market close today, Apple reported financial results for its fiscal fourth quarter, surpassing its revenue guidance handily but falling well below the expectations of the usually spot-on amateur analyst crowd. The company reported revenues of $28.27 billion, up almost $7 billion from the year-ago quarter. Earnings per share came in at $7.05. Gross margin was 40.3 percent, versus 36.9 percent in the year-ago quarter. The results represent the best-ever September quarter for Apple. Mac sales in the quarter were 4.89 million; iPads were 11.12 million and iPhones came in at 17.07 million, even noting that the iPhone 4S did not arrive in time to impact the Q4 results. For the full fiscal year 2011, revenues were $108B and earnings were $26B. Apple's stock closed today at $422.24, and is currently down to $404.50 in after-hours trading. We'll be live at 5pm ET with our liveblog commentary on the Apple earnings call. Full press release below. Show full PR text Apple Reports Fourth Quarter Results All-Time Record Mac and iPad Sales Highest September Quarter Revenue and Earnings Ever CUPERTINO, Calif.--(BUSINESS WIRE)--Apple® today announced financial results for its fiscal 2011 fourth quarter ended September 24, 2011. The Company posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter's revenue. The Company sold 17.07 million iPhones in the quarter, representing 21 percent unit growth over the year-ago quarter. Apple sold 11.12 million iPads during the quarter, a 166 percent unit increase over the year-ago quarter. The Company sold 4.89 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 6.62 million iPods, a 27 percent unit decline from the year-ago quarter. "We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion," said Tim Cook, Apple's CEO. "Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline." "We are extremely pleased with our record September quarter revenue and earnings and with cash generation of $5.4 billion during the quarter," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the first fiscal quarter of 2012, which will span 14 weeks rather than 13, we expect revenue of about $37 billion and we expect diluted earnings per share of about $9.30." Apple will provide live streaming of its Q4 2011 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2011 at www.apple.com/quicktime/qtv/earningsq411. This webcast will also be available for replay for approximately two weeks thereafter. This press release contains forward-looking statements including without limitation those about the Company's estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company's reaction to those factors, on consumer and business buying decisions with respect to the Company's products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; the effect that the Company's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company's international operations; the Company's reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company's dependency on the performance of distributors, carriers and other resellers of the Company's products; the effect that product and service quality problems could have on the Company's sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company's financial results is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's public reports filed with the SEC, including the Company's Form 10-K for the fiscal year ended September 25, 2010, its Forms 10-Q for the quarters ended December 25, 2010; March 26, 2011; and June 25, 2011; and its Form 10-K for the fiscal year ended September 24, 2011 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.
Reminder: Apple fourth quarter FY11 earnings announcement today
After the market close today (4pm Eastern), Apple will announce quarterly earnings for its 2011 fiscal fourth quarter. Apple's fiscal year ended on September 25 (roughly aligned with the US federal government's fiscal year), which means that the all-important upcoming holiday quarter is actually Apple's Q1 of 2012. As usual, the earnings guidance ($25 billion in revenue, $5.50 earnings per share) provided by Apple at the start of the quarter is likely to be almost comically conservative; Philip Elmer-DeWitt at Apple 2.0 provides an overview of the results forecasts, and comes up with an estimated "whisper number" built atop the educated guesses of the non-pro analysts with the most consistent track record. The results, by their lights, should be somewhere north of $30B in revenue and $8 EPS. The psychological milestones of a non-holiday quarter with four million Macs and ten million iPads sold are almost certainly going to be passed as well. At about 5pm ET, the company's executives will hop on their quarterly analyst call to discuss the results. We'll be here for live commentary and consideration, so set a reminder below and join us! Note: TUAW does not provide financial or investment advice.
