Bearish grunts from a pair of Apple bulls
You know Apple (AAPL) is in for a bumpy quarter when both Gene Munster and Andy Zaky sound bearish notes in advance of the company's fiscal Q2 earnings report — due out Wednesday after the markets close.
Munster, a senior research analyst at Piper Jaffray, is one of Apple's strongest supporters among the mainstream analysts. And Zaky, who writes a blog called Bullish Cross, is best known for his quarterly analyst smackdowns, in which bloggers who follow the stock challenge the pros to do a better job than they at predicting Apple's numbers.
Neither man has turned negative on Apple. Munster retains his "buy" rating and is sticking to his price target of $180 a share — one of the highest in the industry. And Zaky, while acknowledging that the Street's consensus estimates for Q2 — earnings of $1.09 a share on revenue of $7.94 billion — are "more fairly stated" than they've been in recent quarters, still expects Apple to beat them.
Munster, however, issued a report to clients Tuesday in which he predicts that Apple will miss the Street's consensus on both revenue (by a hair) and earnings (by a mile). See chart:
And while Zaky believes the Street is still too cautious, he has become uncharacteristically pessimistic about Apple's near-term prospects.
"Bullish Cross is readjusting its outlook on Apple to a view that is more commensurate with the increasingly bleak economic environment," he wrote in a post published Monday on Seeking Alpha. "Given the relatively high lack of transparency with regard to iPhone and Macintosh sales going forward, Bullish Cross holds an increasingly cautious view with regard to Apple's fundamentals and earnings estimates in 2009."
Given that Munster expects Apple to meet or beat the consensus on Mac, iPhone and iPod sales, it's hard to understand at first glance why his earnings estimate is so low — $.98 per share vs. the Street's $1.09 and Zaky's $1.19. But in Tuesday's report he explains that he calculated that $.98 using the guidance on gross margins that Apple issued in January (32.5%). Using the gross margins Apple enjoyed in Q1 (34.7%) his EPS estimate jumps to $1.11.
Given how easily Zaky expects Apple to beat the consensus on revenue and EPS — and how loudly he has railed in the past at analysts too "clueless" to follow Apple's iPhone accounting — he is surprisingly toned-down this quarter. He has even canceled his quarterly smackdown.
His new "agnostic" attitude toward Apple may have something to do with the fact that Wall Street seems to have come around to his view of the company, driving Apple's shares up 24% in the past month. It may also have something to do with the disclosure at the end of his post:
Disclosure: No Position in Apple.
It turns out that Zaky, who has been heavily invested in Apple all this time, has sold his shares.
Apple's quarterly earnings call is scheduled for Wednesday, April 22, at 5 p.m. ET (2 p.m. PT). Tune in here for live coverage and analysis.
See also:
Props to Turley Muller who predicted 1.32 EPS (1.33 actual) and nailed the gross margins angle very close on Mac numbers too.
My own predictions, no I didn't go to law school, and no I didnt' stay at a Holiday Inn Express, are:
$8.3B GAAP
$9.1B non-GAAP
3.5M iPhones shipped
$1.29 eps
all assuming normal inventory levels maintained of 5 to 6 weeks.
"Zaky, who has been heavily invested in Apple all this time, has sold his shares."
I'm impressed with Zaky. Obviously he is an Apple booster who knows when to take a profit – a rare breed.
Jeez. I thought Apple was supposed to be the world's greatest tech stock going. RIM was able to beat it's numbers and got a huge pop on earnings and yet Apple, which is supposed to be magnitudes of a better company than RIM is going to fall flat on it's face. WTF?!!!
What good are all those Retail Stores, iPhone deferred payments, better than average customer service and huge cash reserve doing for this company and it's investors? What the hell happened to all those iPhones that Munster said Apple was going to sell in 2009. How many?! Up to 45 million of them. Has Apple sold even 5 million, yet? I'm just a little puzzled about how such a great company can't even get a little pop at earnings time. Never mind. Maybe next quarter, for sure. I won't bother to follow the analysts, I'll just look into my crystal ball.
"I’m a law school graduate and I’ve been trading for 10+ years, but CNN is not citing my thoughts."
Have you gone out on a limb and made predictions/estimates in public? Guys like Zacky (and Munster) aren't afraid to publish their thoughts. If they are right enough times, they get picked up by the press. Fortune covers Zacky, because he nailed some numbers a while back, and isn't afraid to challenge the establishment publicly.
Go start analyzing/posting on your own blog, and and commenting intelligently around on some financial boards. Maybe then CNN will cite you.
Attacking the coverage someone else gets based on their photo, school and fewer years of exp. than you, without posting your own online track record of analysis? Not a great start.
Gene has been sport on about this company. He was telling to buy at $85 and he's been saying trim (not sell all) from $105 to $120. If Gene is getting less bullish on the stock it's probably time to sell.
I think Apple can exceed $1.30, even on soft revenue numbers. The consensus EPS estimate of 1.08 is too low because of the gross margins assumptions being way too low. Last Q was 34.7%, and this quarter will be much higher 36.5-37%, but the consensus estimate implies A gross Margin of around 33%.
That's where AAPL will surprise allowing it to beat the EPS number even is Revenue misses.
I don't mean to be too cynical, but why should I trust Zacky? He's been trading 6-7 years and is a UCLA law school graduate… and???? No offense, I'm sure he's competent, but to be honest I'm a law school graduate and I've been trading for 10+ years, but CNN is not citing my thoughts. I just wonder what position the writer here is trying to push and why he's citing Zacky to do it? Zacky's blog spot photo looks like a guy at a frat party. Again, I don't mean any disrespect, just not sure why Munster and Zacky are being compared in the same article. It's amazing to me who the "experts" are and how someone on blogspot is getting cited in a national forum.
Both Andy and Gene are way off in their EPS. I'd like to think I have authority in the matter, as my estimates have been the best on the street for the past year (just check out my last 3 quarterly estimates for Apple, there's no comparison in my EPS and theirs)…
Q2 2009 Revenue = $7.99b
Assuming a 15.2% net profit margin based on high iPhone margins and the 24mo accrual method…
Q2 2009 Net Profit = $1.22b
Earnings per Share assuming 907m shares = $1.34
Mac Computer Sales
Q2 2008 = 2,289,000
Desktops = 856k units
Portables = 1,433k units
Q2 2009 = 2,261,000
Desktops (20% decrease yr/yr) = 685k units
Avg Revenue per Desktop = $1,456 based on Q4 2008
Desktop Revenue = $.99b
Portables (10% growth yr/yr) = 1,576k units
Avg Revenue per Portable = $1,347 based on Q4 2008
Portable Revenue = $2.12b
iPods: iPod Shuffle has been a hit, and with a gross margin of over
$50, contributes well to the bottom line.
Q2 2008 units = 10,644,000
Q2 2009 units = 10,200,000
Avg Revenue per unit = $146.00
Q1 2009 Revenue = $1.49b
Music (2% growth Q2 2009 over Q2 2008)
Q2 2008 = $881m
Q2 2009 = $899m
Software, Service & Other Sales (5% growth)
Q2 2008 = $529m
Q2 2009 = $555m
Peripherals and Other Hardware (5% growth)
Q2 2008 = $412m
Q2 2009 = $432m
iPhone
Est. 3.1m iPhones sold Q2 2009
Q1 2009 = $1,247m
Q2 2009 = $1,501m
Q2 2009 Revenue = $7.99b
Q2 2009 Net Profit = $1.22b
Earnings per Share assuming 907m shares = $1.34
Cool beans then on Zaky's disclosure issues then. I don't actually read his blog, so that makes me the idjit, not him.
I was never a fan of those smackdowns and all that boisterous talk. Let the numbers do the talking. I'm at $8.45B, $1.29.
What does Turley say?
ex ped: Turley Muller of Financial Alchemist sent me these estimates:
Rev: 8.02
EPS: 1.32
nonGAAP Rev: 8.65
nonGAAP EPS: 1.68
iPhones: 3.40
iPods: 9.50
Macs: 2.15
Wait, so when Zaky was heavily invested in AAPL he gave no disclosure notice. Now, he gives a disclosure notice to tell us he holds no position? What's that supposed to mean? Now he's shorting them? Blog writers. Yeesh. Can he not spell ETHICS or is he just a manipulator.
ex ped: No, you're wrong. When Zaky was long Apple, he said so at the end of his posts. Or at least on the ones I've checked.
Apple Inc. reported a surprise gain in net income for its second fiscal quarter as sales for the period came in better than expected. For the quarter ended March 31, Apple (AAPL: 121.51, -0.25, -0.2%) reported net income of $1.2 billion, or $1.33 per share, compared to earnings of $1 billion, or $1.16 a share, for the same period the previous year. Sales grew 9% to $8.17 billion for the quarter. Analysts were expecting Apple to report earnings of $1.09 per share on revenue of $8 billion, according to consensus estimates from FactSet Research.
2.22 MM macs – representing a 3% decline YOQ
11.01 MM ipods – representing a 3% increase YOQ
3.79 iPhone – representing a 123% increase YOQ
Gross Margins – 36.4% up from 32.9% YOQ
THEIR MARGINS ARE INCREASING IN A DIFFICULT ECONOMIC TIMES – HAHAHAHA
Absolutely FUKING amazing. Slight decline in macs (especially since the hot selling Macbook Air was released YOQ), but everything else is firing on all cylinders. iPods continue to show growth, and iPhones are still selling at a good clip.
All these numbers trounce the idiot ANALyst estimates.
Oh, and 30 billion in cash!