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Sheluvme
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  • Revising My Apple EPS. 0 comments
    Jan 22, 2013 6:26 PM | about stocks: AAPL

    Verizon reported their sales numbers today, and threw a wrench into my projections.

    I was actually SHOCKED that iPhone captured 63% of VZ smartphone sales of 9.8 million, which equals = 6.3 million.

    This is the LARGEST market share ever that Apple has achieved as a percent of Verizon sales.

    However, one word of caution is that at least 50% of the 6.3 million were not the iPhone 5s (meaning they were the iPhone 4 and 4s).

    This is actually good and bad for Apple. It will decrease their average selling price per unit (always reflected as ASP). However, the continued subsidies on iphone 4 and 4s, and the decreasing manufacturing cost for the older phones, still has led to gross margin on these phones as high as 65-70%. If this trend extends to Apple's other customers, iPhone 4 and 4s taking a larger mix of sales than anticipated, we may end up seeing a slightly higher GM than anticipated.

    I am lowering the ASP in my model, but significantly upgrading total unit sales.

    Verizon sales have historically averaged 11% of Apple total iPhone unit sales.

    So at 6.3 / 10.75% of vz sales / total iphones = 58.6 million

    Given that Apple has performed their largest and fastest rollout ever to over 100 countries the historical Verizon share % should come in lower than average. Hence my projection from 11% to 10.75%.

    Additionally, at&t has provided total smartphone sales, and we could expect similiar sequential market share grab of the iPhone. ~80% market share of AT&T sales = ~ 8 million iPhones (10.2 million smartphones sold as official number).

    Sprint can be estimated at 2 million iphones.

    Total domestic iphone sales = 16.3 million

    This is important because we can use another historic markup. iPhone domestic sales typically represent 30 - 35% market share of total iPhone sales. Again, assuming international did really well this quarter, we can use the low end of 30%.

    16.3 million / .30 = 54.33 million

    I will take the average of these two assumptions for a final projection of 56.5 million

    This is setting up for a beat that would be on the highest end of independent analyst forecast. My numbers are below:

    New EPS Estimates:

    Revenue: 61.5 Billion

    iPhones: 56.5 million units

    iPads: 27 million units (11 million minis though don't expect breakout of this figure)

    GM %: 38.5%

    EPS: 15.75

    Disclosure: I am long AAPL.

    Additional disclosure: long apple options

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