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Apple: March Quarter Projections Significantly Higher Than The Street

|About: Apple Inc. (AAPL)

There are a lot of moving parts to projecting Apple's (NASDAQ:AAPL) revenue and earnings in any given quarter but the March quarter is particularly challenging. Items ranging from the December quarter having 14 weeks, the iPhone having a great December quarter due to pent-up demand, the iPhone being officially launched in China at China Unicomm in January and at China Telecomm in March, the new iPad shipping on March 16 to what gross margins could be given the weakness in memory pricing.

My product projections are:

My revenue, gross margin and earnings projections are:

  • Revenue of $41 billion
  • Gross margin of 45.5%
  • EPS of $12.25

These are significantly higher than the Street's revenue projection of $36.6 billion and EPS of $10 and guidance of $32.5 billion and $8.50. I believe the buy-side analysts are looking for about $38 billion in revenue and $10.50 to $11 in earnings.

It is worth noting that in the past two years Apple's revenue has decreased by 14% and 8% from the December quarter to March quarter, respectively, while EPS has decreased by 9% and 1% respectively. My projections are for a 12% revenue decline and 12% EPS decline but again the December quarter having 14 weeks could make for an apples to oranges comparison.

I believe the Street will have to increase its full year fiscal earnings projections after the March quarter is announced. Currently the Street is expecting about $44.37 in EPS for fiscal 2012. Since the company should generate $25 in EPS in its fiscal first half the second half earnings would about $20, a major decline which I don't think will occur as I believe Apple can earn $50 this year.

At Friday's closing price of $573 the stock would be trading at 11.5x my $50 EPS estimate and that does not take into account the approximately $115 in cash and investments per share the company should have as of the end of March.

Disclosure: I am long AAPL.