Apple Inc.(NASDAQ:AAPL) is deferring recognition of iPhone sales because many sold during the quarter require software updates and the new 3G version was released only earlier this month. As a result, revenue from sales of the uber-popular smart phone won’t be part of the company’s third quarter results.
Nonetheless, analysts have their estimates for iPhone shipments in the quarter, with RBC Capital Market’s Mike Abramsky at 700,000. He told clients he expects $300-million in iPhone cash received with deferred revenue rising to $2-billion from $1.9-billion in the second quarter.
Along with conservative guidance from Apple, Mr. Abramsky expects it will be momentum from Mac computer sales and back-to-school promotions that drove a healthy earnings beat on Monday. He forecasts revenue of $7.5-billion, up 38% year-over-year, and above the Street at US$7.4-billion. Earnings per share [EPS] are expected to come in at $1.13, while the Street is at $1.08.
The analyst sees a “typical conservative outlook” from Apple with fourth quarter revenue in the range of $8-billion to $8.3-billion and EPS guidance at $1.21 to $1.25. He added that Apple shares may face guidance-related pressure in the next quarter or two as a result of a greater iPhone mix, but feels “investors continue to underestimate iPhone upside potential.”
RBC continues to rate Apple shares at “outperform” with a $220 price target, which represents upside of roughly 33%.