Earnings Preview: Apple

Apple (AAPL) is expected to report Q3 earnings Monday, July 21 after market close, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is $1.08 for EPS and $7.36B for revenue, according to First Call. CFO Peter Oppenheimer said in April that the company expects to earn $1.00 a share in EPS on revenue of $7.2B.

Analyst Views

The "whisper" number is $1.11. The company is known for low-balling expectations and being conservative with its fiscal outlooks. Sanford Bernstein expects Apple to top the average estimates, and expects Apple to earn $1.12 a share on revenue of $7.6B. Bernstein said Apple's Macintosh and iPod sales likely were strong during the quarter, and that the company probably benefited from U.S. consumers spending their economic stimulus checks on Apple products. The firm believes Apple will report Mac sales of 2.5M units, 10.3M iPods, and $400M in iPhone sales for Q3. As far as the iPhone is concerned, the new 3G model was released after Apple's Q3 ended in June, so none of the 1M devices that were sold in the first weekend of availability will have any effect on the upcoming results.

Other Street thoughts: Piper reiterated its Buy rating ahead of Q3 results as it believes upside to Mac and iPod units may drive upside to the June quarter. The firm believes Mac units could reach 2.35M, above the Street's 2.2M estimate. Pacific Crest echos that sentiment saying that strong consumer demand for Mac and iPhone, along with an attractive component pricing environment, can drive near-term upside to estimates. Additionally, increasing enterprise penetration can add to near-term demand while extending Apple's growth period. Additionally, FTN Midwest's checks indicate Mac sales are above plan in June and July is off to a good start.

Now that the initial hoopla surrounding the release of the 3G iPhone has settled down, analysts are more likely to keep their eyes on what Apple will have to say about the outlook for its current Q4. PacCrest believes Q4 guidance will likely be conservative. But, strong demand for iPhone along with a likely Macbook refresh during back-to-school should drive excellent Q4 growth.

Comments

[Andy Singh:]

I am getting ready for an APPL beatdown. Perhaps it was a mistake to buy stocks before the launch. I wrote about my reasons, but should I sell before the earnings and buy back after they report (I still believe in the long term story!)

2008 Jul 18 03:47 PM

[Shorting Sh...:]

Its unbelievable how 'investors' are treating Apple, a company that is putting America back on the consumer electronics map.

Its unconceivable to me that Apple will either miss $1.08/share or guide lower than the street at $1.24.

2008 Jul 18 03:57 PM

[aapladay:]

After today, bad news is already priced in. Apple followed msft and goog down on their results, not Apple's. AAPL has lost to the market the past 2 sessions, so its basically 3 days of losses on no bad news from AAPL. Word is option expirations also causing the down trend today which should lead to a rebound Monday. I thought of selling some of me other stocks today and getting more AAPL, but I'm already AAPL heavy myself. Probably won't hit 200 though until a broad market recovery happens, but when it does go thru 200, LLLLOOK OUT!

2008 Jul 18 04:14 PM

[taojones:]

if investors are supposed to be "forward looking" they must have their windows painted black the Lines are still long after a week and the biggest problem they have is making enough product.beating them down because of dumb old google or any other pc company is stupid they are in a class by themselves and should be judged that way . the noise about "smaller Margins" should be tempered by "HUGE VOLUME"

2008 Jul 18 04:51 PM

[stay strong:]

I bought AAPL shares today because:

1) INTC and IBM beat earnings and beat guidance = good for Imac
2) NOK is optimistic about the cell phone industry = good for Iphone
3) AAPL is down from $174 to $165 the last two days
4) Jim cramer said to sell

So let's give it a shot and see what happens. It's only money! haha jk

2008 Jul 18 05:01 PM

[San_Fran_Sam:]

If Jimbo said sell, that's a good enough reason for me not to.

2008 Jul 18 05:30 PM

[Tavares:]

Yeah I jumped in front of earnings for GOOG and got burned so I think I am gonna slideline this one. Eventhough I am fighting the temptation because I feel like AAPL is on a run and I would hate to miss the train Monday if their is upside, but most reports I have come across see AAPL at $150 after earnings. 15 points down from it's current position would be a good entering point if this happens.

2008 Jul 18 08:28 PM

[buddy_j:]

Buy Apple on Monday morning and be prepared to sell it on Tuesday. Take your profits while you can.

2008 Jul 19 09:09 AM

[mollytjm:]

on monday apple will still be fiscally sound, with loads of $, profits and innovation. on monday it's products will still be flying off the shelves. our king of prussia, PA apple store had a line of 50 people waiting to buy the iphone yesterday, AND the store was packed with people buying computers and all the other stuff and that was true for apple stores all over the country. on monday, i will still be a long term apple investor with confidence that this company is not only here to stay, but here to take over.

2008 Jul 19 10:01 AM

[steveballmer:]

Spiraling downwards!

2008 Jul 19 11:07 PM