Q4 earnings: A guide to Apple's guidanceOctober 20, 2008: 10:41 AM ET
Apple guides conservatively -- which is to say it low-balls its earnings and revenue numbers for the coming quarter so that it can blow them out of the water three months later. It's a game the company plays every quarter, but the market never seems to learn; Apple's shares invariably take a hit in after-hours trading.
To help his clients get a handle on this phenomenon in advance of Apple's fourth-quarter earnings report -- scheduled for release Tuesday afternoon -- Piper Jaffray's Gene Munster has issued a handy guide to Apple's guidance, complete with charts going back eight quarters.
Bottom line: on average over the past two years, Apple (AAPL) has guided earnings per share 9% below Street expectations and revenue 4% below. Then when it reports its actual earnings, it beats the Street's consensus 27% on EPS and 4% on revenue.
There's some variation, as you can see from the charts below. Apple actually guided higher than the Street's expectations for the December quarter last year, triggering a run on the stock that took it to over $200 a share. Munster doesn't expect a repeat of that this year. In fact, given the dismal economic climate, he warns that Apple's guidance could be even more conservative than usual. Specifically, he expects the company to guide EPS 5% below consensus to about $1.41 and revenues 15% below consensus to about $10.1 billion.
Piper Jaffray's (PJC) estimates for Q4 remain unchanged and are summarized in the chart below. Meanwhile, Munster is sticking stubbornly to his target of $250 a share, resisting the recent downgrade trend (see here). For a table comparing Munster's Q4 estimates with those of other leading Wall Street analysts -- and a few unpaid analysts who claim to have a better track record than the professionals -- see Apple Q4 earnings smackdown.
Apple has scheduled an earnings conference call for Tuesday at 5 p.m. ET. We'll be listening in and live blogging here.