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.
quote: you might as well use a magic 8-ball