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Professional analysts expect anemic performance from Apple, independent blogger analysts predict terrific earnings

The warning signs for chic-tech maker Apple are abundant.  First their undisputed leader and guiding hand, CEO Steve Jobs, took a medical leave of absence, announcing he was out until at least June.  Then there was news that Apples sales growth in the PC market was slowing, as Acer jumped Apple to regain the third place spot in the U.S. market.

Still Apple is far from out of the game.  And while Macworld might have been a bit of a snooze for Apple watchers, the yearly Q1 2009 earnings report should bring great excitement.  Last year Q1 2008 brought commanding earnings, which showed tremendous growth.

For the last couple years, bloggers like Andy Zaky with the blog Bullish Cross have been making predictions of Apple's earnings, challenging professional analysts.  And over the last year, while a bit overreaching at times, their numbers have been consistently closer to the mark than professional analysts, an embarrassing observance in the financial community.

And this quarter, Mr. Zaky expected the trend to continue, stating, "If previous earnings debacles weren’t already embarrassing enough for the analysts then this quarter should be one for the books."

Thomson Financial’s polling data, reported in The Street, predicted a weak quarter performance out of Apple.  They predicted a total revenue of $9.74B USD, similar to Apple's guidance revenue mark of $9B USD to $10B USD, but still disappointing.

However, Mr. Zaky and his colleagues predicted much higher revenue, up to $1B USD higher.  Most of the independent blogger-turned-analysts were in line with higher predictions.  According to Mr. Zaky, professional analysts failed to consider the importance of adjusted — or non-GAAP — earnings which will fully report iPhone revenue.  This should help to greatly increase the total revenue, he said.

The final numbers are out, and it’s a win for the bloggers -- sorta.  The actual numbers are in and the bloggers outguessed the analysts with some figures, while equally missing the mark and earning a draw in others.

The revenue was indeed higher, as they predicted, but it lay roughly between Mr. Zaky's prediction and the professional analyst consensus, with Apple posting an expectation-beating revenue of $10.167B USD, a growth of 10 percent over last year.  Profit rose just barely 2 percent to $1.605B USD, up from $1.581B USD in Q1 2008. 

The bloggers, especially Mr. Zaky, did greatly overpredict the number of iPhones sold, with the actual number at 4.363 million units.  However they came much closer than the pros to predicting the iPod sales, which shocked everyone by posting 22.727 million units (4 million units or more higher than some analyst predictions).  Mac shipments came in at 2.524, again roughly a draw between the bloggers and pros.

The one place where the pros schooled the bloggers was in the non-GAAP income.  Mr. Zaky predicted $13.646B USD, but the actual non-GAAP revenue was only $11.8B USD, between two of the three professional analyst predictions.  The main reason why the bloggers got beat so badly in this category is that iPhone sales fell a couple million units short of their predictions, and thus less iPhone related revenue was brought in than they expected.

In the end both the bloggers and the analysts can spin their performance as a victory.  Ultimately, matching professional analysts blow for blow is still somewhat of a victory for the bloggers, as they don't command the financial prestige of their top rank competitors in the professional analyst community. 

For the pros it’s also somewhat welcome news as at least they didn't get embarrassed badly this time.  And the real winner is Apple, which can breathe a sigh of relief as predictions of its doom and demise may ease -- for a little while, at least.



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I bet...
By MrBlastman on 1/22/2009 9:27:30 AM , Rating: 0
These same blogger fanboi "analysts" are the same people who elected Barrack Obama and expect him to make them instantly wealthy, cure them from all diseases and walk on water all the while saving the planet from all evil...

Pretty funny. They had a term for something like this a few years back, something called "brainwashing." :)




RE: I bet...
By Master Kenobi (blog) on 1/22/2009 9:32:39 AM , Rating: 2
I think Apple's financials will likely take a hit now as the impact of Steve, Economy, and lack of new and exciting products takes its toll.


RE: I bet...
By Shadowself on 1/22/2009 10:06:53 AM , Rating: 2
Steve's latest letter already had a $5 to $10 per share impact. I doubt it will get hit again for the same reason.

Despite the fact that Apple is selling more product than ever; despite the fact that Apple is making more profit than ever; despite the fact that Apple has a more diverse product line than ever; despite the fact that Apple has enough cash on hand to virtually buy Dell for cash -- Apple's stock has is down to just about 45% of what it was a year ago. I would suggest that this implies the "Economy" has already had its impact on Apple's share price.

Apple introduced the iPhone 3G this past summer. Apple introduced the "unibody" MacBooks a few months ago. Who knows what Apple will introduce in the coming months. Just because they didn't have some big splash at MacWorld does not mean they won't have one in the coming months. We all see to have very short memories. Apple announced during their October financial call that they were undertaking a totally new project that would not bear fruit for at least 9 months and that the IR&D expenses would have an impact on financials over that period. The stock took a hit because of that announcement. What will the product be? I have no idea (and likely neither does anyone else outside of a small group within Apple).

Maybe there will be no new/exciting products from Apple for the next year, but I doubt it. Apple has built its reputation on coming up with new (and sometimes better) ways to do things. If they don't keep it up, the stock will take a hit. However, this will not happen for a few months. They've got breathing room.


RE: I bet...
By MrBlastman on 1/22/2009 12:31:35 PM , Rating: 2
The memory of the market is... 3 months. Short term indeed. It is just long enough to forget last quarters earnings when the current quarters earnings come out.

I think I'm being too generous though, because in reality, the memory of the market is only as long as it takes for the next major headline in the news to come around. The market is a soap opera. It is not logical, it does not make sense. Fear and Greed run the big show, my fellow poster, not facts and sanity.

Right now, we're all scared about what is going to happen to Steve. Scared at weather he will come back or he will move on, and scared as to who might have the clout to take the grand chair in the i-palace - and, succeed.


RE: I bet...
By MrBlastman on 1/22/2009 12:32:38 PM , Rating: 2
(sp) weather -> whether

One of these days I'll get it right.


RE: I bet...
By Lord 666 on 1/23/2009 4:42:02 AM , Rating: 2
A truly innovative move on Apple's part would be purchasing Sirius XM. This would negate need for wifi for content delivery at hotspots and allow access almost anywhere.

It would also put an Apple product in a majority of new cars and enable seemless transition between personal and car audio.

Lastly, if you like a song on Sirius, it could be purchased with a button click.


RE: I bet...
By Pirks on 1/22/2009 2:54:56 PM , Rating: 2
quote:
Apple's financials will likely take a hit now as the impact of Steve, Economy, and lack of new and exciting products takes its toll
Kenobi, you totally missed this time :-P Is that an effect of RDF? ;-) Anyway -> http://windowsitpro.com/Articles/Index.cfm?Article... Enjoy :PPP


RE: I bet...
By Pirks on 1/22/2009 3:33:46 PM , Rating: 2
Kenobi, if you meant results for the next quarter, not the current one announced yesterday - then never mind.


RE: I bet...
By mondo1234 on 1/22/2009 3:23:25 PM , Rating: 2
Compared to who....Microsoft? I hope you got rid of your shares. Stock wise, MS has been relatively flat for atleast 5 years.

http://finance.yahoo.com/echarts?s=MSFT#symbol=MSF...

Until today, that is. The clock was rolled back 11 years. Wallstreet has been luke warm on MS for quite since 2000. Wallstreet is now cold on the company. I havent bought MS since 2002. It might get worse with the sell off. Time to cut bait on Balmer. Like him or not, he isn't a very good CEO.


RE: I bet...
By Shadowself on 1/22/2009 9:55:58 AM , Rating: 2
And I bet you're the type of person who is against anything good ever happening -- no matter who is leading it. You're miserable, and you want everyone else to be miserable too.

Sure, politics will keep 50-80% of what Obama has proposed from ever happening. Not every politician will get their own cut so they will block a lot of it. They will instead stick in pieces that make no sense and will cost a ridiculous amount of money.

However, there is no excuse for not trying.


RE: I bet...
By MrBlastman on 1/22/2009 12:27:13 PM , Rating: 2
I'm not against anything good happening. Not at all.

Unfortunately, what I see being attempted to make happen, I feel, is bad for the Republic, our Freedom and in the views of our Constitutions intention, contrary to many of its own provisions. We must remember that we are a "Republic" and not a "Democracy." All Democracies lead to the same end-result - Socialism. A Republic is supposed to instill a greater sense of "responsibility" and "ownership" among the people. This very reponsibility, is obviously lacking in our current times.

Taking the "responsibility" out of the hands of the citizens that should possess it, turns the Republic down the path of Socialism. If people would take ownership of their actions, we would not be crying for the government to bail us out and help us when we, ourselves, created this problem to begin with. The government will not simply help us all for free - they want us to pay a price. The price at hand, here, right now - is our freedom.

Disagree if you may, I see it how it is. I'm also a lunatic as I've already spent my proposed Obama stimulus check on something - that he is clearly against. ;) An armed society is one that polices itself. It is a society that protects itself from its own people - and its own government. Thanks Obama for the money! I suppose I'm living up to my name. :)

How is giving up our own means to control our destiny and place it in the hands of our Government completely, blindly and without question - a "good" thing? I hope you come up with a good answer because I certainly see no positive in decreasing our freedoms. Let the people work it out, let the Government be the referee, but please - do not let the government be our provider too.


RE: I bet...
By mikefarinha on 1/22/2009 3:34:56 PM , Rating: 2
Well put MrBlastman.


RE: I bet...
By foolsgambit11 on 1/22/2009 7:28:55 PM , Rating: 2
What makes you say that Democracies all lead to Socialism? Athens never became socialist, as far as I know. The fact that some modern 'democracies' have socialist parties, and quasi-socialist policies, ignores the fact that modern non-democracies have turned socialist at possibly a greater pace than democracies. Russia, China, Cuba - not democracies. In fact, I can think of no democratic country in the past 500 years. Period. They're all republics. What is more, socialism as a political philosophy didn't exist when the Constitution was made, so its intentions could have had nothing to do with preventing socialism.

Also, how does having less input in government increase sentiments of ownership and responsibility? That's contrary to common sense, which would say that direct involvement in the decision-making process would increase the sense of ownership. You are conflating 'republican' and 'capitalist', I think. Capitalism engenders a sense of ownership and personal responsibility. But there's nothing inherently capitalist about republican government. China has republican government.

The irony in everything you say is that you purposefully distance yourself from your government. But democracy (and some forms of republican government, including ours) are governments of the people. Not that I don't support the people having literal power, as well as metaphorical power. So go ahead and arm. At the moment, I don't think it's necessary - the military would never follow orders to put down rebellion against unconstitutional acts. But someday, maybe they would, and it doesn't hurt to be prepared. However, at the moment, there are more effective ways for society to police itself than the threat of violence. Like political action groups, lobbying, and voting.

Nobody is asking you to give up control of your destiny (if you really have it to begin with) and unquestioningly give it to the government. We're asking you to find somebody you can trust to wield power and vote for him or her. That's how the people "work it out" in a democratic republic like our own. The government then implements the policies they think are right and good, with the Constitution in mind, and with the Supreme Court as the 'referee'. If what is right and good is some level of security provided by the government, then so be it. Both the "winners" and "losers" agreed to the rules, and have to live with the outcome. (Of course, they can continue to work towards a change of the laws within the system - that's the beauty of it.)

But still, I'm not sure how Obama's policies can be construed as decreasing our freedoms. I especially can't see how that argument applies after the Bush administration's track record on that issue. I agree that I can see very few liberties I currently have that I would wish to part with. But the use of this nebulous, unformed, inchoate 'freedom' argument still bothers me. What are the specific liberties you are afraid of losing? Was it acceptable to lose the liberties compromised in the USAPATRIOT Act and the warrantless wiretapping program? Why or why not? If it was acceptable, then there is obviously a positive in decreasing some of our freedoms. If not, why won't you give Obama a chance, since he has consistently fought to protect against those encroachments of civil liberties?


RE: I bet...
By oab on 1/22/2009 10:31:17 PM , Rating: 2
Not all democracies are republics. I live in a constitutional monarchy, which happens also to be a democracy.

The UK, Australia, New Zealand, Canada, Denmark, Norway, the Netherlands, Japan, all constitutional monarchies, which are also democracies.


RE: I bet...
By kelmon on 1/22/09, Rating: 0
RE: I bet...
By MrBlastman on 1/22/2009 12:54:39 PM , Rating: 2
If Obama has his way, we'll all have more time than ever before to do just that - wank all day. :)


RE: I bet...
By Dark Legion on 1/22/2009 10:49:02 AM , Rating: 1
You know, I think this may be the first time on DT that somebody that said something AGAINST Obama got rated down, atleast to a -1. Congrats blastman.


RE: I bet...
By Meinolf on 1/22/2009 1:21:05 PM , Rating: 1
I just like the fact Barrack Obama is at least smart. After 8 years of Dumb ass We need someone that got out the first grade.


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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