Thursday, April 21, 2011 10:27:30 AM
http://blogs.wsj.com/marketbeat/2011/04/21/apple-earnings-some-smart-takeaways/?mod=yahoo_hs
By Matt Phillips
As we all know, it was another great quarter for Apple. (Although iPad sales seemed below expectations due to supply constraints.) The dozens of analysts — almost all bullish — are out with their glowing notes. Here’s a smattering of what we’re reading.
Rob Cihra, Caris: Macs +28% [year-over-year growth] represented Apple’s 20th straight quarter of PC share gain. Key products included late-Feb’s MacBook Pro refresh, while we expect a new iMac soon enough, with desktops -12% year-over-year vs. portables +53% year-over-year.
Andy Perkins, Societe Generale: Unit sales of the iPhone were 18.6 million versus expectations of 16.3 million and it now accounts for over 5% of the market for all handsets. We believe the iPhone is one of Apple’s highest margin products and as such higher sales helped boost overall margins.
Brian Marshall, Gleacher: Sometimes we have to step back from our AAPL financial model and simply shake our heads in awe…it is amazing how it developed over the years. For example, in CY08, AAPL generated [around] $38.9 billion of revenue with [around] $9.2 billion in operating profits (23.7% operating margin) with the iPhone representing [around] 23% of total sales. Today, we are introducing our [calendar year] estimates of [around] $132.5 billion in revenue and [around] $40.9 billion in operating profits (30.9% operating margin) with the iPhone generating [around] 46% of total sales. To put this into perspective, over this 5-year timeframe, AAPL will have grown its revenue base more than three-fold while simultaneously more than quadrupling its operating profit.
Gene Munster, Piper Jaffray: We continue to believe that Apple will ship the iPhone 5 in the Sept. quarter (likely in the month of Sept.). Apple would not comment on whether the issues in Japan would affect the supply of components in the Sept. quarter, but the situation among Apple’s Japanese suppliers appears to be better than widely expected.
Scott Craig, BofA Merrill Lynch: The main reason for our consistently above consensus EPS has been gross margin. [Fiscal second quarter 2011] was 41.4% (up 290 [basis points quarter-on-quarter], above our 40.2% estimate, and ahead of guidance by 290 [basis points on] mix (iPhone), leverage, and better commodity costs. [Fiscal third quarter 2011] guidance for gross margin down 340 [basis points, or 3.40 percentage points, quarter-on-quarter] (mix shift to iPads, less leverage) seems typically conservative. We model gross margin of 40.4% (-100 [basis points quarter on quarter]) on mix. Apple does not expect component pricing to impact [fiscal third quarter 2011].
Bill Shope, Goldman Sachs: iPad shortfall a supply, not a demand, issue. Apple reported iPad shipments of 4.69 million, versus our forecast of 6.15 million. Apple noted that consumer enthusiasm has been tremendous for the iPad 2, but that it could not ramp its early launch volumes fast enough to meet demand. The company now sees supply ramping very quickly, and the company expects a significant increase in shipments this quarter.
Mark Moskowitz, J.P. Morgan: We believe that the recent pullback in Apple shares was overdone and based on investor fears of weak iPhone and Mac results as well as margin pressures due to Japan and supply chain weakness. Apple overcame theses issues in a big way in the March quarter, and also for the [fiscal third quarter of 2011] guide, which we think stands to put shares of Apple back on an upward track.
Kathryn Huberty, Morgan Stanley: Given Apple’s success in China (revenue +250% [year-over-year] in March), the company looks to replicate its strategy in other emerging markets which is NOT incorporated in our or consensus forecasts. This could indicate a more formal distribution strategy in India over the next year.
Ben Reitzes, Barclays Capital: We believe the App Store remains a key differentiating factor for Apple’s iPhone, iPad and iPod Touch. This software strategy enables a distinctive “stickiness,” which should enhance customer loyalty/retention over the long term as “apps” personalize devices to levels that competitive imitations cannot match. Also, the use and purchase of apps over cellular networks assures that iPhones retain relatively high usage characteristics, leading to the purchase of data plans that drive high subsidies from carriers (=high margins for Apple over time.)
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