I estimated Apple's (NASDAQ:AAPL) June quarter's EPS would be $7.47 (actual was $7.47 vs. the high-end of guidance of $7.45) on revenue of $36 billion, which was higher than the reported $35.3 billion. For the September quarter I projected EPS of $8.26 (actual of $8.26 vs. the high-end of guidance of $8.09) with revenue of $38.1 billion, which was again higher than the reported $37.5 billion. This is a link to a Fortune article that verifies my estimates and Apple's results for the two quarters.
For the December quarter I am projecting revenue of $59.8 billion and EPS of $14.64, both slightly above the high-end of Apple's guidance.
Apple's December quarter guidance results in EPS between $12.95 and $14.24
For the December quarter Apple gave revenue guidance on its September quarter results conference call of $55 to $58 billion with gross margin between 36.5% and 37.5%. When you take into account the company's operating expense, other income and tax rate guidance, along with an estimated share count of 904 million, the EPS range is between $12.95 and $14.24.
I am estimating revenue of $59.8 billion
Last quarter Apple beat the top end of its $37 billion revenue guidance by $472 million and last year it beat its December quarter guidance of $52 billion by $2.5 billion. My $59.8 billion is $1.8 billion above the high-end of the $55 to $58 billion range. If there is a quarter that Apple has a better than even chance of beating its guidance it would be the December quarter due to holiday sales coming in stronger than expected.
iPhones could hit 57.5 million
Last year Apple sold 47.8 million iPhones in the December quarter and I am expecting 57.5 million, up 20% year over year. A year ago the quarterly unit growth rate was 77% when adjusted for channel inventory and for this year they need to increase 82% quarter over quarter to hit my estimate.
I believe this is possible due to China Telecom and China Unicom and NTT DoCoMo in Japan selling them during the quarter vs. a year ago when they were not available with these three carriers. Also having two new models, the 5c and 5s, this year vs. only one new one last year, the 5, also helps. ASP's (Average Selling Prices) are projected to decrease 7% year over year from $642 to $595. iPhone revenue would be $34.2 billion, up 12% year over year, and account for 57% of total revenue.
iPads could hit 25.7 million
Last year Apple sold 22.9 million iPads in the December quarter and I am expecting 25.7 million this year, up 12%. While last year the mini introduced a new form factor I believe the iPad Air along with the new Retina mini and a $299 original mini will lead to higher unit sales than a year ago. It will also help that the Air and Retina mini were available in more countries at their launch than the mini a year ago.
I am expecting ASPs to come in at $470 since the Retina mini starts at $399 (vs. the original mini starting at $329 last year) but this is offset by the original mini's price dropping from $329 to $299. iPad revenue would be $12.1 billion, up 13% year over year, and account for 20% of total revenue.
Gross margin at 37.4% and 904 million shares gives EPS of $14.64
I am projecting that gross margin will come in towards the high-end of Apple's 36.5% to 37.5% guidance. For the past two quarters gross margin has been 0.1% below and at the top end of guidance, respectively. Gross margins will be helped by iPhones, which have the highest gross margin of hardware products, projected to generate 57% of total revenue.
If Apple spent about $4 billion in the quarter, which is what it needs to spend to reach its $60 billion goal by December 2015, there would be 9.6 million fewer shares outstanding at an average price of $518. However since they would have been bought throughout the quarter the share count would decrease by about 5 million fewer shares.
This leads to EPS of $14.64 (vs. the high-end of guidance of $14.24), which would be a 6% year over year increase and the first increase since the September 2012 quarter.
Summary of my track record
Over the past seven quarters I have been the #1 independent analyst in three of 14 categories and in the top 6 10 of 14 times. I have also been in the top 10 six times out of 14 categories when measured against all analysts from the estimates compiled by Philip Elmer-Dewitt at Fortune.
September 2013 quarter:
Hit EPS of $8.26
8th of 22 Independent and 8th of 44 all analysts for Revenue and EPS
1st of 22 Independent and 1st of 44 all analysts for All Categories
June 2013 quarter:
Hit EPS result of $7.47
1st of 23 Independent and 9th of 57 all analysts for Revenue and EPS
10th of 23 Independent and 30th of 57 all analysts for All Categories
March 2013 quarter:
4th of 25 Independent and 17th of 62 all analysts for Revenue and EPS
5th of 25 Independent and 14th of 62 all analysts for All Categories
December 2012 quarter:
8th of 29 Independent and 29th of 68 all analysts for Revenue and EPS
11th of 29 Independent and 28th of 68 for All Categories
Sept. 2012 quarter:
3rd of 17 Independent and 15th of 37 all analysts for Revenue and EPS
1st of 17 Independent and 7th of 37 all analysts for All Categories
June 2012 quarter:
6th of 34 Independent and 39th of 68 all analysts for Revenue and EPS
3rd of 34 Independent and 35th of 68 all analysts for All Categories
March 2012 quarter:
2nd of 57 all analysts for Revenue and EPS
4th of 57 all analysts for All Categories
Additional disclosure: Besides owning Apple shares I have also sold puts which is also a bullish position.Sand Hill Insights and Chuck Jones is not a registered investment advisor or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. Sand Hill Insights does not purport to tell or suggest which investment securities readers should buy or sell. Readers should conduct their own research and due diligence and obtain professional advice before making investment decision. Sand Hill Insights will not be liable for any loss or damage caused by information obtained in our materials. Readers are solely responsible for their own investment decisions.