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Apple CEO Steve P. Jobs holding the elusive white iPhone 4  (Source: The Star)
Company continues to put analyst estimates to shame

Another quarter has rolled around, so did a bullish Apple embarrass the Wall Street analysts yet again?  Such an event has seemingly been a quarterly tradition by now.  But this quarter's earnings reports, while sticking true to tradition in revenue and several other areas, actually fell short of analyst's typically overly conservative expectations in two areas. 

This quarter's earnings will likely be over-scrutinized in the face of much bigger questions facing the trendy gadget maker.  While there'd been a bit of optimism surround the upcoming iPad 2 and availability of a CDMA (3G) iPhone on Verizon, most Apple-related financial chatter over the past two days had centered around the company's CEO, co-founder, and creative guiding hand, Steven P. Jobs taking a medical leave of absence (the CEO has battled cancer over the last decade and is recovering currently from a liver transplant).

A strong earnings report wouldn't completely silence concerns about a possible future Apple leadership crisis, but it might offer a decent distraction.

Apple's official accounting of calendar Q4 2010 earnings trickled in at around 4:30 p.m. on January 18.

Revenue was $26.74B USD, a new record, grossly surpassing the consensus expectation of $24.4B USD and the "high" expectation of $25.5B USD.  Earnings per share (EPS) similarly whipped expectations to the tune of $6.43 USD, versus a consensus estimate of $5.38, and a "high" estimate of $6.02.

IPhone and iPad shipments beat expectations, recording 16.24 million and 7.33 million, respectively, units shipped, versus respective expectations of 15.5 million and 6.2 million.  

If there was one trouble spot in the earnings report, it was the shipments of Mac computers and iPods, which fell short of expectations.  Apple only shipped 4.1 million Macs vs. a consensus of 4.3 million, and only shipped 19.45 million iPods vs. a consensus expectation of 20.3 million.  

The iPod shortfall is perhaps expected -- sales of the portable music player have slumped as tablets and smartphones have boomed, filling many of the niches once filled by the portable music player.  The lower than expected Mac shipments are a bit more troublesome and a sign perhaps that Apple is slowing in its quest to gain ground on industry leaders Dell and HP.  The Mac shipments, while lower than expected, represented a 23 percent increase from shipments a year ago.  The iPod shipments, on the other hand, represented a 7 percent drop.

Despite the couple of weak metrics, the record revenue, strong iPad/iPhone sales, and higher than expected revenue/EPS guidance for Q1 2011 all culminated to a generally positive reception of the report.  While it is early to fully characterize the net impact, Apple stock in resumed after hours trading has swung upwards $7.23 USD/share, a 2.12 percent gain that almost erases a 2.25 percent Tuesday drop, which was driven by the aforementioned leadership concerns.

Apple CEO Steve Jobs, put in a good word, enthusing, "We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales. We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on."

Note: We originally overstated the revenue as $27B USD.  It is actually slightly lower ($26.74B USD).  Some have questioned the analyst consensus surrounding Macs.  We have consulted several different publications, and the figure 4.3 million is consistent across them and appears correct.  Apple also fell short of its own Mac sales predictions.

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RE: Beginning of the End for Mac?
By Tony Swash on 1/19/2011 11:33:58 AM , Rating: 2
FYI the consensus was 4.3 million, not 4. Its been reported many times that this was the figure most people agreed with before the earning call. They certainly missed it, and the wall street is going to notice.

Apple sold more Macs than in any similar period in it's 25 year history of selling Macs.

Mac sales grew by 23% over a year ago.

Mac sales growth out grew the PC market growth by a significant amount.

What some third parties guessed might be the figure is utterly irrelevant. These are the same clowns that said iPad sales wouldn't top 3 million in 2010. That the iPhone would flop. That the iPod would flop. I could make a guess that Android phone sales will increase by 500% in the next quarter and then claim any actual figure short of that is a disappointment. Such comments are worthless. It's actual results that count.

All this nonsense on this forum is just about one thing, people trying desperately - desperately - to find some way to talk down Apple's results. That's because Apple's success scares. It scares them because they don't understand it, they don't how it's been achieved and they don't understand why so many people seem to really, really like Apple products.

Something is happening and they don't know what it is.

RE: Beginning of the End for Mac?
By omnicronx on 1/19/11, Rating: 0
By Tony Swash on 1/19/2011 11:51:56 AM , Rating: 2
That said, the fact that you are calling the guys down at Wall Street utterly irrelevant just shows that you don't know what you are talking about. Apples stock was valued based on those expectations, and it will most likely have a negative impact, just as the same people undervalued their total revenues which will most likely have a positive impact.

Apple stock is up today. Two days after Steve Jobs announced health issues.

Moments after posting, and just before seeing you comment, I came across this piece at which says everything you need to know about professional forecasts.

Professional analysts’ first year iPad unit forecasts in millions (sourced from TMO Finance Board)

Brian Marshall, Broadpoint AmTech 7.0
David Bailey, Goldman Sachs 6.2
Kathryn Huberty, Morgan Stanley 6.0
Shaw Wu, Kauffman Bros. 5.0
Mike Abramsky, RBC Capital Markets 5.0
Gene Munster, Piper Jaffray 3.5
Ben Reitzes, Barclays Capital 2.9
Keith Bachman, BMO Capital 2.5
Jeff Fidacaro, Susquehanna 2.1
Chris Whitmore, Deutsche Bank 2.0
Scott Craig, Merrill Lynch 1.2
Peter Misek, Canaccord Adams 1.2
Doug Reid, Thomas Weisel 1.1
Yair Reiner, Oppenheimer 1.1
Here are the predictions from Tech Bloggers:

Clayton Morris: 9
John Gruber: 8
Horace Dediu: 6
Natali Del Conte: 5
Ross Rubin: 5
Mike Rose: 4.5-5
Jason Snell: 3
Andy Ihnatko: 3

Apple sold 14.8 million iPads in 2010.

I sometimes use the phrase “unforeseeable growth” to describe the kind of growth that not even the most knowledgeable observers of a market can predict. It’s usually an indicator that fundamentally transformational change is taking place.

It’s not a sufficient condition, but it’s clear that “nobody saw it coming” is a common refrain when disruptions are seen in the rear-view mirror.

If analysts, to a man, fail, you can be sure that competitors are no wiser. This collective shrug amounts to the greatest competitive advantage any entrant could ever hope to obtain.

RE: Beginning of the End for Mac?
By Pirks on 1/19/2011 11:47:21 AM , Rating: 2
people trying desperately - desperately - to find some way to talk down Apple's fanatics
so many people seem to really, really like Apple products
jeeebuuusss!!! we gonna diiee!!! the whole TWO percent of the world's computer users use Apple computers, this is SOOO MANYYY! how CAN WE SURVIVE NOWWW!! oh horrorrr :))))

"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg

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