Apple's Competent June Quarter

In the first six months of Apple's current fiscal year, the device maker realized revenue growth of 66.35% and earnings per share growth of 104.03%. The successful release of the iPhone 4S and the addition of new carriers such as Sprint pushed recognized revenue from iPhone sales up nearly 107% in the six-month period and represented 55% of the company's revenue total.

On July 24th, Apple will release results for the fiscal quarter ended June 30th. While I don't expect the pace of revenue and earnings growth in the June quarter to match the rates of growth realized in the first six months of the fiscal year, I do expect Apple to report strong growth in what I am calling "Apple's Competent June Quarter."

For the quarter, I expect revenue growth of 41.37% to $40.391 billion and eps growth of 53.40% to $11.95 per share. In the June quarter I expect the Apple iPad line to have delivered the largest percentage of year-over-year revenue growth among Apple's major device lines while the iPhone will deliver the biggest revenue growth numbers. Combined, I expect the iPhone and iPad to deliver 75% of the quarter's recognized revenue total. 

The chart below illustrates my anticipated revenue mix by product line:

Apple's Monster Quarter - The Sequel

Last fall I dubbed Apple's December quarter "The Monster Quarter". The company's December quarter performance lived up to the name. In the 14-week period ended December 31, 2011, Apple reported recognized revenue growth of 73.27% to $46.333 billion and eps growth of 115.71% to $13.87. 

Apple's Monster Quarter - The Sequel
Today I am calling the company's March quarter "Apple's Monster Quarter - The Sequel." For the 13-week period ended March 31, 2012, I am estimating reported revenue of $44.028 billion and earnings per share of $13.15, representing anticipated revenue growth of 78.49% and eps growth of 105.47%. 

The chart below illustrates my estimated revenue mix for the March quarter. I expect the Apple iPad and iPhone to represent 77% of the reported revenue in the quarter and for the iPhone to be the primary product in determining the quarter's revenue growth, gross margin and eps outcome for the period.

The Braeburn Group AAPL March Quarter Estimates

On April 24th Apple will announce results for the company's 2nd fiscal quarter ended March 31st. To gauge expectations for the March quarter, we asked members of the Braeburn Group, formerly known as the AAPL Independent Analysts, to submit estimates for the company's March quarter performance. The group takes its new name from the braeburn apple, a hybrid cultivar of the popular fruit.

Among the fifteen Braeburn Group members who submitted estimates for the March quarter are Dennis Hildebrand, Navin Nagrani, Patrick Smellie and newcomers Scott Millar and Christian Peel. Collectively these fifteen individuals represent a cross section of the Group's members and come from a variety of professional backgrounds and career interests. Membership in this private group is open to those willing to register and actively participate in the group's lively discussions. 

On average Braeburn Group Index participants anticipate the following March quarter unit sales results:

		Macs	4,617,307	22.80%	YOY Growth
		iPhones	38,232,733	105.03%	YOY Growth
		iPads	13,301,667	183.38%	YOY Growth
		iPods	6,844,933	-24.09%	YOY Growth

Notes on the Unit Sales Estimates:

Mac Sales: In Apple's 14-week December quarter, Mac unit sales rose 25.74% to 5.198 million units. The average unit sales growth estimate from the Braeburn Group Index participants suggests unit sales growth of 22.80%, on track with the 22.19% unit sales growth Apple reported in in the fiscal year ended last September. 

iPhone Unit Sales: On average, the Braeburn Group Index participants expect iPhone unit sales growth of 105% to 38.232 million units. This is below the December quarter unit sales growth pace of 128% and slightly above the FY2011 unit sales growth rate of 99%.

iPad Unit Sales: The introduction of the new iPad in the final month of the March quarter has produced a wide range of unit sales estimate from the Braeburn Group Index analysts. For the quarter, the fifteen participants anticipate on average unit sales of sales of 13.301 million iPads and associated unit sales growth of over 183%.

iPod Unit Sales: On average, the index participants anticipate a nearly 25% decline in year-over-year iPod sales to about 6.845 million units. 

The Apple Analyst Sandbag Factor

Each fiscal quarter Apple 2.0's Philip Elmer-DeWitt provides an index of quarterly estimates that include numbers from a select group of bloggers and numbers from Wall Street pros. For the September quarter, the differences in the estimates from the bloggers and the pros have the widest divergence since the quarterly indexes began. This quarter the gap is so pronounced it might best be described as a chasm. Revenue estimates range from a high of $37.19 billion from Mark Beauch of the AAPL Independent Analysts group to a low of $26.36 billion from Morgan Stanley's Kathryn Hubert. On earnings per share, the estimates range from a high of $10.01 put forward by this author to a low of $6.30 also from Kathryn Huberty. 

The table below lists the average revenue and eps estimates from the 16 bloggers and the 28 pros who submitted revenue and eps numbers. 

The Apple Analyst Sandbag Factor

There's more to the difference in the average eps estimates from the two groups than the difference in revenue estimates. This difference is what I call "The Apple Analyst Sandbag Factor."

The purpose of this exercise is to remove differences in the revenue estimates from the numbers submitted by the individual analysts and compare each analyst's eps outcome to their respective revenue estimate, using Apple's June quarter results as a constant in the review. The outcome of the analysis indicates the Wall Street analysts are forecasting a significant deterioration in Apple's net income and eps performance per revenue dollar based on their own revenue and eps numbers. This anticipated deterioration in net income and eps performance represents the "Sandbag Factor."

The chart below lists the September quarter estimates from the analysts. The content is courtesy of Apple 2.0 and is from the article titled, Wall Street Still Doesn't Understand Apple published on October 11, 2011. The analysts are ranked by revenue estimate. The bloggers are highlighted in green and the Wall Street pros are highlighted in blue.

The AAPL Independent Analysts FQ4 Estimate Index

On October 18th Apple will announce results for the company's 4th fiscal quarter ended September 24th. To gauge expectations for the quarter, we asked members of the AAPL Independent Analysts group on Linkedin and members of the Apple Finance Board who have participated in prior quarterly indexes to submit estimates of the company's 4th fiscal quarter performance. 

Among the fourteen individuals who submitted estimates for this September quarter index are well known independent analysts Horace Dediu and Daniel Tello, returning analysts Navin Nagrani and Patrick Smellie and newcomers Michael Cranston and Martin Epstein. Collectively these individuals represent a cross section of the AAPL independent analyst community and come from various professional backgrounds and career interests. 

On average index participants anticipate the following September quarter unit sales results:

	Macs	4,677,500			20.40% YOY Rise
	iPhones	23,765,071			68.52% YOY Rise
	iPods	7,158,857			20.91% YOY Decline
	iPads	13,624,214			225.32% YOY Rise

Notes on the Unit Sales Numbers:

Mac sales: Over the first nine months of FY 2011, Macintosh unit sales rose 21.1%. The index average is inline with the recent unit sales trend and reflects confidence in Mac sales during the recent back-to-school season.

iPhone sales: The index average reflects expectations of a slower rate of growth in iPhone unit sales in the 4th quarter due to the release of the iPhone 5 in the holiday quarter. During the first nine months of the fiscal year iPhone unit sales rose 113%. 

iPod sales: The Apple iPod remains in a state of steady unit sales decline. The iOS-based Apple iPod touch remains the biggest revenue generator among the available iPod models. Apple's decision this year to offer $100 in iTunes content to students purchasing a new Mac versus a free iPod touch will influence iPod unit sales results in the quarter. 

iPad sales: The index average suggests anticipation of strong iPad unit sales in the September quarter as Apple strived to resolve the challenge of constrained product supplies. Index participants expect a rise in unit sales of 225% over the prior-year period.