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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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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.


"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA














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