Apple 2.0

Covering the business that Steve Jobs built

Apple's rare miss: Katy Huberty nailed it. The bloggers blew it.

July 25, 2012: 7:30 AM ET

The professional in Q3 made the independents look like what most of them are: Amateurs

Click to enlarge.

FORTUNE -- "Don't play darts with Katy Huberty," one of our readers commented after Apple (AAPL) reported earnings Tuesday that fell short of every other analyst's expectations. "She's on a hot streak."

If ever there was a quarter in which it paid an Apple analyst to be cautious, this was it. Morgan Stanley's Katy Huberty, whose low-ball estimates put her at or near the bottom of our Earnings Smackdowns three out of the last four quarters, nailed it this time, beating 67 other analysts in the three line items that matter most: Revenue, earnings per share and iPhone unit sales.

On the other end of the table at right, this was a quarter to remind our independent analysts that past performance is no guarantee of future results. With the single exception of Societe Generale's Andy Perkins -- the most bullish of the pros this quarter -- the estimates furthest from the mark were all turned in by indies.

Gregg Thurman of the Braeburn Group did hit closest on the iPod unit sales number. Otherwise there is almost nothing good to be said for the performance of our expanded pool of independent analysts. Last place went to Thembelani Kewtane, a newcomer to the Braeburn group, who in his exuberance turned in the worst numbers in four of the seven categories: Revenue, EPS, iPhone and Mac unit sales.

As a group, the indies' estimates were off by a humiliating 51.4%.  This is the second quarter in a year that they have been clobbered by the pros, and the third out of last four that they've overshot their mark on revenue. It's clearly time for some of them to reexamine the growth assumptions in their Apple models.

Not that the pros did  that well. Their estimates missed by an average of 17.1%, and not one of them expected Apple to turn in such modest results.

But they earned the kudos this quarter. In addition to Huberty, special mention goes to Sterne Agee's Shaw Wu and Canaccord Genuity's T. Michael Walkley who shared her best estimate of 27 million on the critical iPhone sales number (actual sales: 26.028 million).

Also worthy of praise:

  • Bernstein's Toni Sacconaghi, who turned in the second-best revenue estimate and missed the Mac unit sales number by only 7,000 units
  • Atlantic Equities James Cordwell, who submitted an estimate of 17 million iPads sold, just shy of the actual unit sales number: 17,042,000.
  • Cowen & Co.'s Matthew Hoffman, whose gross margin estimate (42.9%) missed the actual result -- 42.8% -- by a hair.

For the record, our "best" analysts -- the top performers over the past seven quarters -- got clobbered along with the rest of the independents, beating the pros in only one category: iPod sales.

Best estimates in green.

Once again, the key to correctly predicting Apple's bottom line was getting the iPhone number right.

Below the fold: Our annotated master spreadsheet, with the best estimates highlighted in bright green, the second and third best in light green, the worst in red and the second and third worst in pink.

Click to enlarge.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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