Munster: A guide to Apple's guidanceJuly 14, 2009: 6:28 AM ET
Apple (AAPL), as we've said many times before, 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 nearly every quarter, but the market never seems to learn; Apple's shares usually take a hit in after-hours trading.
But maybe not next week, when the company is scheduled to report its fiscal third quarter earnings after the markets close on Tuesday, July 21.
Oh, Apple's guidance will still be conservative; you can count on that.
But according to Piper Jaffray's Gene Munster, for once it could be in line with or ahead of the Street's expectations — a development that he believes would be a "material positive." In other words, it could send the stock, which is up nearly 60% so far this year, even higher over the next three months.
In a report to clients issued early Tuesday morning, Munster reviews Apple's guidance and ticks off the reasons he believes the company's earnings estimates for the fourth fiscal quarter could be — for only the second time in the past 12 quarters — in line with the analysts' consensus.
"While it is impossible to predict the company's language around guidance and the numbers," he writes, "we believe it is more likely than usual that the company could guide Sept. revenue in-line with consensus at $9.0 [billion], at least on the high end of the range. [Earnings per share], however, is more likely to be below consensus of $1.29."
Apple has easily beaten its own guidance the past 12 quarters and, like every other analyst we've heard from, Munster expects it to do so again next Tuesday.
Apple's Q3 guidance is for revenues to come in between $7.7 and $7.9 billion and earnings between $.95 and $1 a share. The Street is looking for Q3 revenues of $8.16 billion and earnings of $1.16. Munster's numbers, despite his reputation as an Apple booster, are lower than the Street's. He's expecting $8 billion and $1.02, respectively.
But more to Munster's point, Apple for the past 12 quarters, having guided 12% lower than the Street in earnings and 4% in revenue, has beaten the Street's estimates by 24% in earnings and 3% in revenue. See Munster's charts below the fold.
What's different in Q4, says Munster, is that Apple has good reasons to issue guidance> for the September quarter that's in the Street's ballpark, among them:
- Strong demand for MacBook Pros. September will be the first full quarter of sales for the new 13″ MacBook Pro priced at $1,199, a "value proposition" that Munster says has "increased dramatically" year over year.
- Back-to-school promotions. The improved value proposition of the 13″ MacBook Pro adds to the impact the annual back-to-school promotion (which includes free iPod touches) will have on Mac sales.
- Better than expected retail sales. Growth rates reported by NPD are trending positively and Apple is having trouble meeting demand for MacBook Pros. See here.
Below: Munster's spreadsheets for the past 12 quarters of earnings guidance.