I've noticed that several people take issue with my stance on Apple's (AAPL) valuation. So I thought I would take it upon myself to fully state my current view on Apple. I have always been and always will be completely open minded to others' thoughts on this subject and I'm amenable to changing my mind when good arguments are presented in support of contrary opinion. I recently changed my stance on Apple's fundamentals upon reviewing my math on the current tradgectory of Apple's earnings in 2009. I've given careful thought on what I think Apple could earn in each quarter of 2009 and this is what I have arrived at (pardon the preposition).

2009 Estimates
Q1: $10.167b (rev); $1.78 (eps)
Q2: $8.318b (rev); $1.19 (eps)
Q3: $8.728b (rev); $1.29 (eps)
Q4: $9.378b (rev); $1.52 (eps)
FY09: $36.591b (rev); $5.78 (eps)

Bullish Cross is readjusting its outlook on Apple (AAPL) to a view that is more commensurate with the increasingly bleak economic environment. As unemployment continues to rise and discretionary income contracts, Apple will undoubtedly struggle to keep up its explosive growth in 2009. The current consensus estimates for 2009 have Apple earning $5.15 in EPS on revenue of $35.14 billion. While the current research data is less than favorable, the consensus is still overly pessimistic on the current period.

However, given the relatively high lack of transparency with regard to iPhone and Macintosh sales going forward, Bullish Cross holds an increasingly cautious view with regard to Apple's fundamentals and earnings estimates in 2009. Bullish Cross now expects Apple to earn about $5.78 in EPS on $36.591 billion in revenue down from $6.63 in EPS on $41.196 billion in revenue. This reduction in estimates is due in large part to Apple's intentionally making it more difficult, if not impossible, to track iPhone sales using IMEI data. However, if the third generation iPhone is well received by the consumer this summer or if the economic climate becomes substantially more improved in the latter half of 2009, there is ample room for Apple to handily beat these estimates.

Shares of Apple, Inc (Nasdaq: AAPL) might be halted after the close of regular trading today due to much higher than expected revenue and earnings results. Occasionally, stocks will be halted when a company's earnings results come in at levels that are far beyond the normal variance seen in a typical earnings report. In Q1 2007, for example, the NASDAQ halted trading in Apple when it delivered a pretty hefty beat on both the top and bottom lines. The NASDAQ will typically halt trading in a stock when big market moving news is pending. They do this both to allow a settling in of the news, and to give market makers time to organize the buy and sell orders in orderly fashion. I think this particular report might be one of those situations where the NASDAQ halts trading as Apple's earnings results are released to the public.

Analysts polled by Thomson Financial expect Apple to report earnings of $1.38 in EPS on $9.74 billion in revenue when Apple releases its results shortly after the close of trading this afternoon. The analysts are looking for Apple to sell approximately 4.5 million iPhones, 18.5 million iPods and about 2.45 million Macs this quarter. I'm looking for Apple to beat those expectations quite handily. I expect Apple to report earnings of $1.81 in EPS on $10.730 billion in revenue driven in part by sales of 7.11 million iPhones, 20 million iPods and 2.72 million Macs. On a non-GAAP basis, I'm expecting Apple to report earnings of $3.12 in EPS on $13.646 billion in revenue driven by approximately $4.266 billion in fully recognized iPhone revenue. The tables below outline my earnings forecast, and unit sales estimates for Apple's first fiscal quarter of 2009:

In April of 2007, Peter Oppenheimer (Apple’s (AAPL) CFO) announced that Apple will be using what is commonly referred to as the “subscription method of accounting” for sales of the iPhone where the sales revenue from the iPhone is deferred and recognized over a 24-month period instead of at the point of sale. Both that decision and the underlying reason in support of the decision would go down as being one of the worst in Apple’s history. In his opening statement of the Q2 2007 earnings call, Oppenheimer made the following alarming comments:

Since iPhone customers will likely be our best advocates for the product, we want to get them many of these new features and applications at no additional charge as they become available. Since we will be periodically providing new software features to iPhone customers free of charge, we will use subscription accounting and recognize the revenue and product cost of goods sold associated with iPhone handset sales on a straight line basis over 24 months. So while the cash from iPhone sales will be collected at the time of sale, we will be recording deferred revenue and costs of goods sold on our balance sheet, and amortizing both of them into our earnings on a straight line basis over 24 months. We will continue to expense our iPhone engineering, sales and marketing costs as we incur them. This accounting policy will have no impact on cash flow or the economics of our business.

Four months ago, the analyst consensus estimate for 2009 had Apple (AAPL) earning $6.36 in EPS on approximately $40 billion in revenue. Since that time, the economy has gone through a major financial crisis, which has led many analysts to revise their estimates down, quite dramatically. As of Wednesday, the analysts were now looking for Apple to earn $5.35 in EPS on approximately $37.5 billion in revenue in 2009. The consensus has Apple literally contracting on the year—down from $5.36 in EPS in 2008. These extraordinarily bearish consensus estimates have set Apple up to beat revenue expectations by approximately $900 million each quarter in 2009.

I expect Apple to earn about $6.63 in EPS on $41.2 billion in revenue beating expectations by $1.28 in EPS and $3.63 billion in revenue. This amounts to an average quarterly beat of $907 million in revenue and $0.32 in EPS. Even before this recent bout of downward revisions to the estimate, I saw the consensus as already pricing in a moderate to severe recession.

When Apple (AAPL) reports earnings in January for its first fiscal quarter of 2009, the investment community could be greeted with the mother of all earnings blowouts. The analyst consensus estimates have gotten so absurdly bearish, that Apple might beat revenue expectations by as much as $1.210 billion dollars—and that's with a mild contraction in iPod sales! I can't remember the last time any company beat revenue expectations by a full $1.2 billion, but I can only imagine how the stock price would react on such a beat. Almost as impressive is the 36.1% beat on analyst EPS estimates that I am confident Apple will achieve.

The analysts are currently modeling for Apple to earn $1.44 in EPS on $10.080 billion in revenue. By contrast, I'm looking for Apple to earn closer to $1.96 in EPS on $11.29 billion in revenue. That would mark the largest revenue beat by any company I've ever seen, and will generally be an all out fantasy-like decimation of analyst consensus estimates. Depending on where the stock price is at the time of earnings, where the consensus and whisper numbers stand going into the results, and the market's current sentiment on equities, I wouldn't be surprised to see a 20-point move in the stock price. This is a once in a blue moon type of earnings situation that will likely be far more surprising than Google's (GOOG) results last April.

FBR chip analyst Craig Berger, an analyst who doesn't cover Apple (AAPL), issued an interesting note today regarding iPhone production rates. He noted that according to his unqualified "checks" (whatever they may be), iPhone production rates may fall up to 40% in calendar Q4 (fiscal Q1). It's interesting that a semiconductor analyst thinks he is even in a position to be able comment on a company that he doesn't cover — a practice that seems to be the trend this year. But this wouldn't be the first time that Craig Berger has commented on Apple's production rates and it certainly wouldn't be the first time he was dead wrong. As a matter of fact, saying that Craig Berger has been "dead wrong" in his forecasts with Apple would be a gross understatement as the data below illustrates. I would even go so far as to actually view Craig Berger's projections as being extremely bullish. See for yourself.

In February 2008, nearly halfway through fiscal Q2 2008, Berger gave a very bearish outlook for Apple's production rates for several of Apple's products for Q2. Remember, this was at a time when the prevailing sentiment on Wall Street was that the United States was in a recession and that Apple's products simply couldn't withstand a "slowdown" in consumer spending. Shares of Apple had been beaten to pulp in February, much as they are today. Berger's comments in February seemed to be based more on misplaced bearish beliefs about the economy than actual channel checks. At least, that's what his defective predictions would seem to indicate to almost any observer.

As the U.S. equity markets continue the long process of making a bottom in what is now considered to be one of the worst bear markets in history, tech investors should begin to shift their focus on a comparative valuation analysis of the leaders in the tech industry. Tech companies with solid balance sheets, large cash hoards and solid growth rates will fare a lot better in a market recovery than those whose valuations did not dramatically deflate over the past year. Of the nine big tech companies I've reviewed, Apple (AAPL) stands out as being the most radically undervalued in the tech sector on an objective basis.

Apple has more net cash than each of the nine big tech stocks, zero debt, trades at the lowest price-to-cash ratio of only 3.79, grew earnings faster than every other tech company except for Research In Motion (RIMM), and is generating almost $3.00 per share in free cash flow every quarter. Just to get an idea of how undervalued Apple is compared to others in the tech sector, one need only to consider where these other tech companies would stand if they were valued in the same way as Apple i.e. if those same companies were met with the same general bearishness that Apple is faced with.

Now that Apple (AAPL) has reported its earnings for the full 2008 fiscal year, I think it's important for investors to focus on how Apple would have performed if it fully recognized the revenue and earnings from its sales of the iPhone. Apple's true 2008 financial results have been hitherto veiled under a shroud of financial secrecy that I set out to finally irrevocably uncover, since Wall Street analysts apparently cannot do their jobs. Someone needs to put an end to this nonsense and if not the analysts, then it's up to the investment community to make such determinations on their own.

The Apple earnings confusion has largely been the result of Apple's relatively (un)complicated subscription method of accounting for sales of the iPhone. Most analysts seem to be either thoroughly lazy, or genuinely perplexed by this fairly simple concept; and so I thought I might make their jobs a little easier by reconstructing Apple's 2008 earnings results to reflect what Apple actually earned in 2008. After reviewing several research notes by analysts for the months of September and October, it doesn't surprise me one bit that "the analysts are at the bottom of the s**t heap" or "at the lowest level of the investment banking hierarchy" as described by John Rolfe and Peter Troob in Monkey Business.

If someone were to tell investors two years ago that iPod sales would only contribute 14.2% of Apple’s (AAPL) total revenue and that Apple’s revenue would significantly accelerate to a shocking pace of 75% year-over-year, such an investor would probably guess that Apple’s stock price would be trading at levels significantly higher than it did in 2006. Yet, here we are. Two years later, iPod sales only contributed 14.2% of Apple’s total fiscal Q4 2008 revenue, which grew at a rate of 75% YoY. Yet, Apple’s stock is only $4.00 higher than it was in November 2006.

Investors, the media and the analysts have consistently overstated Apple’s dependence on the iPod for future revenue and earnings growth. In Q1 2008, the street, choosing to disregard iPhone and Mac revenue as being at the core of Apple’s primary driver of future revenue growth, only focused on how iPod unit sales grew at a meager pace of 5% YoY. Wall Street also seemed to disregard the fact that iPod revenue growth in Q1 was still 16.6% higher than it was in the same quarter last year.

In its recently reported fiscal fourth quarter, Apple's (AAPL) adjusted net income grew approximately 124.6% from $1.085 billion in Q4 2007 to $2.437 billion in Q4 2008—an extraordinary number when fully accounting for iPhone sales in both periods. Just as impressive is Apple's 75.1% grow rate in sales. Apple's adjusted revenue grew from $6.673 billion in Q4 2007 to a whopping $11.682 billion in Q4 of 2008. Earnings per share grew 123.0% from $1.21 in Q4 2007 to $2.69 in Q4 2008. This begs the question? Where are the analysts and why aren't they quick to point this out? Only on Wall Street can a company grow earnings 124.6%, sustain bouts of analyst downgrades and see its shares decline 55% (while boasting a 14 forward P/E on a GAAP-basis).

I was both shocked and very disappointed to see no analyst comment on the fact that Apple's business grew an astounding 124.6% on an adjusted (real) basis. What's even more troubling is that no one seems to emphasis the significance of the fact that Apple grew its cash hoard from approximately $21 billion in Q3 to $25 billion in Q4. That's a $5.00 increase in total cash per share from $23.45 in Q3, to $28.22 in Q4. At this pace, and assuming Apple makes no big acquisitions, Apple could very well have nearly $48 per share in cash and cash equivalents by the time we hit November 1, 2009. So I ask again: Where are the analysts and why aren't they making mention of this?

Wall Street investors are holding their breath as Apple (AAPL) is set to report earnings after the close of regular trading this afternoon. This particular report will be one of the most crucial in the company's history as Wall Street and her analysts have completely written Apple off as a business that could thrive in a slower economic environment. In order for Apple's shares to recover from its recent 50% plunge in value, Apple will have to demonstrate its resilience in this slowing economy by both reporting strong earnings results and offering some compelling guidance.

In the past, Apple has consistently offered the Street ultra conservative guidance, basically rendering such guidance useless when it comes to how the company will actually perform. Yet, irrational investors on Wall Street continue to be completely preoccupied with Apple's meaningless guidance making it extremely difficult for Apple to rebound until management gets a clue that its conservative nonsense is not working in this particular environment. Apple should either take a page from Google's book and not offer guidance at all, or offer guidance that is more realistic in this skittish environment. Analysts polled by Thomson Financial expect Apple to post earnings of $1.11 in EPS on $8.05 billion in revenue fueled by sales of 2.7 million Macs, 10.5 million iPods and about 4 million iPhones. For Q1 2009, analysts are generally looking for Apple to report $1.66 in EPS on $10.6 billion in revenue.

This article was co-authored by Seeking Alpha contributor Turley Muller.

Based on the tremendous joint efforts by members at Mac Observer's AFB  and Investor Village's AAPL Sanity Board member howlongtoretire (aka HLTR) to track IMEI iPhone numbers, we have determined that Apple has drastically surpassed analysts' Q4 iPhone sales estimates, and that Apple has reached its goal of selling 10 million iPhones in 2008. The consensus estimates for iPhone sales figures for Apple's Q4 (calendar Q3) were calling for approximately 4 million units. It now appears that Apple has sold at least 7 to 7.5 million iPhones in Q4—that's nearly 80% above consensus. Apple has far surpassed even Gene Munster's bullish estimates of 5 million iPhone sales in Q4 according to the data.

On Monday, Morgan Stanley analyst Katie Huberty lowered her price target on Apple from $192 to $179 citing general weakness in the "global macro-economic environment."

She also lowered price targets on other computer hardware makers including: Dell (DELL), EMC (EMC), Hewlett-Packard (HPQ), IBM (IBM), Adtran (ADTN), Airvana (AIRV), Alcatel-Lucent (ALU), Cisco Systems (CSCO) and several others.

A few of my readers have asked me to do a valuation and place price targets on shares of Apple, Inc. (Nasdaq: AAPL).

I continue to be quite cautious about publishing such an analysis for a number of reasons. First, a shrewd day trader once told me that issues touching on whether and when to buy, sell or hold a stock should be left to the individual investor to consider with their own professional financial advisors. My goal as a financial journalist is to contribute certain thoughts and insights which might help investors form their own opinions as to the merits of different investment strategies - it is not my purpose to make such recommendations in and of themselves.

Seriously now! What's with Wall Street's obvious narrow-mindedness when it comes to Apple's (AAPL) guidance? We all know that Apple guides conservatively every quarter, and every quarter we all know that Apple handedly beats its proffered estimates. Yet for some reason unbeknownst to anyone with at least a shred of intelligence, the media, Wall Street and the uninformed investor get completely caught up in the same old obtuse story: "Will Apple's conservative guidance disappoint investors?"

To that I answer: only if the investor is an idiot. Wall Street is like a child who hasn't realized that touching a hot stove burns until after the fifth attempt at doing so.