The AFB AAPL FQ3 Unit Sales Estimate Index

The Apple Finance Board (AFB) is home to many AAPL traders, investors and Apple product enthusiasts. Among the members of the AFB are well know independent analysts Daniel Tello (deagol), Horace Dediu (aysmco), Turley Muller and Andy Zaky. I serve as the moderator of the AFB under the DawnTreader moniker. 

The AFB AAPL FQ3 Unit Sales Estimates

Each fiscal quarter active members of the AFB are polled for their estimates of Apple's quarterly performance based on product unit sales and financial outcome. Yesterday I posted the revenue and earnings estimates of AFB members participating in the index for the three-month period ended in late June (Apple's FQ3 2011). Today I am posting the unit sales estimates that underpin the anticipated financial results. 

On average the 30 active AFB members participating in the June quarter index estimate Apple will report the following unit sales results by product line. Unit sales numbers are in thousands:

AFB Member AAPL FQ3 Unit Sales Estimate Averages:

Macs	4,330		(24.7% Unit Sales Rise)
iPods	8,335		(11.4% Unit Sales Decline)
iPhones	17,602		(110% Unit Sales Rise)
iPads	8,325		(155% Unit Sales Rise)

Notes On The Numbers:

Macintosh Unit Sales: In the first six months of the current fiscal year (September and March quarters) Macintosh unit sales have risen 25.2%. The AFB member average estimate for Mac unit sales in the June quarter is consistent with the recent unit sales growth trend. 

iPod Unit Sales: iPod unit sales have continued to decline. In the first six months of the current fiscal year iPod unit sales fell more than 10%. The mass adoption of smartphones such as the Apple iPhone with iPod functionality have reduced demand for single-use digital music players. The iPod touch, an iOS-based device, is now the largest unit sales component of the Apple iPod line. 

iPhone Unit Sales: In the March quarter iPhone unit sales rose 113% inclusive of the 155% domestic unit sales growth rate influenced by the release of the Apple iPhone on the Verizon network. In the first six months of the current fiscal year iPhone unit sales rose 99.5%. The average estimate of AFB members suggests the March quarter unit sales growth trend will continue in the June quarter.

Last year Apple significantly reduced iPhone unit shipments in the June quarter ahead of the  release of the iPhone 4, leading to favorable conditions for year-over-year unit sales gains in the June quarter this year. 

iPad Unit Sales: The June quarter is the first quarter in which prior-year iPad unit sales are available. Apple's ability to have met demand for the iPad 2 in the June quarter will have a significant impact of the quarter's unit sales results that will be released later this month.

For more information on Apple product unit sales results please see my article published on May 8th titled Apple: Ten Quarters of Product Unit Sales.

Robert Paul Leitao

Disclosure: The author is long AAPL shares

Posts At Eventide AAPL Price Target: $590 Per Share

Few enterprises in recent history have captured the imagination and stirred the emotions of consumers like Apple. Ask most anyone their view of Apple and one is apt to hear spirited responses ranging from high admiration and praise for the company  to complaints about the way Apple seeks to control virtually all aspects of the user experience and the content available to purchase through the various iTunes and app stores. No matter the strong sentiment about Apple, few can dispute the company's extraordinary success and potential for continued growth.

Apple's Share Price Today

At Friday's closing price of $325.90, the shares are trading at levels last seen in the closing days of calendar year 2010. This is despite the fact the share price reached an all-time high of $364.90 in intra-day trading on February 16th. 

There are, of course, macro economic factors impacting Apple's share price performance and investors are currently trapped in a challenging market cycle. But for the first six months of the current fiscal year Apple's revenue has risen by 76.2% and earnings per share has moved higher by 83.2%. These rates of growth and anticipated similar rates of growth for the remainder of this fiscal year are not currently priced into the company's shares. 

On May 31st I published a posted titled Why I'm Bullish on Apple. In that post I mentioned the company's prospects for growth and the factors that will deliver outstanding revenue and earnings growth well into next fiscal year and put forward my current 12-month price target for AAPL of $590 per share. In this post I'll mention a number of other important factors that will deliver an 80% share price gain over the next twelve months.  I anticipate Apple will move back into a share price trading range of 17 times to 20 times trailing 12-month earnings that prevailed prior to April of this year. That trading range in future periods will represent a compression of the share price relative to earnings when the company's high cash balances are factored into the numbers. 

AAPL Share Price Forecast

The graph and table data below detail Apple's share price on the first day of the month following the release of the company's quarter earnings over the most recent six fiscal quarters and my share price forecasts for the next four fiscal quarters. 

Why I'm Bullish on Apple

Over the past several weeks I've focused much of my analysis work on the performance elements that underpin Apple's extraordinary rates of revenue and earnings growth. Meanwhile, Apple's share price (AAPL) has been trapped in a comparatively narrow and underwhelming trading range since the all-time high of $364.90 was set in intraday activity on February 16th of this year.  

There's much speculation why Apple is currently trading, even after today's strong advance, almost 5% off the all time high at Tuesday's closing price of $347.83 per share. From index rebalancing to hedge fund ploys, most active AAPL traders have their own views as to the factors impacting the share price. But none of these factors in any way impact the company's fundamental strengths nor limit the long-term potential of the share price. I consider AAPL's current trading price to represent a short-term dip below an established trading range prior to a strong, bullish advance. 

The Factors Supporting AAPL Share Price Appreciation

Rising Revenue, Rising Earnings Per Share: Apple remains in an era of extraordinary revenue and earnings growth. During the first six months of FY 2011 Apple's revenue and earnings growth rates have accelerated due to the popularity of the Apple iPad and the continuing success of the Apple iPhone. In the first six months of FY 2011 Apple's revenue rose 76.2% and eps moved higher by 83.2%. Constraints on iPad 2 supplies in the March quarter limited the revenue and earnings growth rate from moving even higher. 

For FY2011 (ending in late September) I forecast Apple's revenue will reach or exceed $112 billion and eps will reach at least $27.50 per share. Based on my forecasts Apple is currently trading at a multiple of only 12.65 times the current fiscal year eps estimate. The revenue growth chart, including my FY 2011 revenue estimate, illustrates the pace of Apple's revenue growth over a six-year period. Over 60% of Apple's revenue in FY 2011 will be sourced from products that did not exist in the marketplace as recently as four years ago today. The markets for the Apple iPhone and especially the Apple iPad have yet to be fully realized and the markets for both products will continue to expand. 

Even more dramatic than the pace of revenue growth is the pace of growth in earnings per share. Form eps of $1.55 in FY 2005 to estimated eps of $27.50 in FY 2011.

Posts At Eventide Resource Guide

Posts At Eventide Resource Guide
As a moderator of the Apple Finance Board and an independent Apple analyst, two of the challenges I encounter in preparing quarterly estimates are finding useful historical information about Apple's quarterly results and formatting that information for purposes of analysis.

My AAPL quarterly estimates and share price forecasts are influenced by the company's most recent results. Consequently, finding and storing relevant financial information is essential in the estimate and forecast development process. As a benefit to members of the AFB and regular readers of this blog, I've posted a Posts At Eventide Resource Guide comprised of  links to Eventide posts that provide financial information for use in the developing quarterly estimates for future periods based at least in part on the company's recent results. 

It's my desire for this work to be a benefit to all readers seeking to understand Apple's recent quarterly performances and to serve as a repository of information about the company's quarterly financial results for the benefit of other independent analysts preapring quarterly estimates and share price forecasts. 

To maintain relevance and timeliness, the listing below includes only AAPL-related articles published over the most recent 12 months. 

Posts At Eventide AAPL analysis articles listed by month of publication. 

Robert Paul Leitao

Apple: Nine Quarters of Results

Apple: Nine Quarters of Results
As a service to AFB members and my fellow AAPL analysts, I'm posting Apple's results for the nine most recent quarters. This post is without commentary and is to serve as a resource and reference for readers who are actively tracking the company's quarterly results.

I will be referencing this post in future Posts At Eventide entries and will be using this data in compiling my own Apple quarterly estimates and AAPL share price forecasts. The quarterly results for FY2009 are post-retrospective adjustments for the change in accounting principles applied to iPhone revenue recognition.

Robert Paul Leitao

	FQ1 2011	FQ4 2010	FQ3 2010	FQ2 2010	FQ1 2010	FQ4 2009	FQ3 2009	FQ2 2009	FQ1 2009
Net sales	26,741	20,342	15,700	13,499	15,683	12,207	9,734	9,084	11,880
Cost of sales	-16,443	-12,831	-9,564	-7,874	-9,272	-7,102	-5,751	-5,457	-7,373
Gross margin	10,298	7,511	6,136	5,625	6,411	5,105	3,983	3,627	4,507
Operating expenses:
Research and development	575	494	464	426	398	358	341	319	315
Selling, general and administrative	1,896	1,571	1,438	1,220	1,288	1,063	1,010	985	1,091
Total operating expenses	-2,471	-2,065	-1,902	-1,646	-1,686	-1,421	-1,351	-1,304	-1,406
Operating income	7,827	5,446	4,234	3,979	4,725	3,684	2,632	2,323	3,101
Other income and expense	136	14	58	50	33	45	60	63	158
Income before provision for income taxes	7,963	5,460	4,292	4,029	4,758	3,729	2,692	2,386	3,259
Provision for income taxes	-1,959	-1,153	-1,039	-955	-1,380	-1,197	-864	-766	-1,004
Net income	6,004	4,307	3,253	3,074	3,378	2,532	1,828	1,620	2,255
Earnings per common share:
Basic	$6.53	$4.71	$3.57	$3.39	$3.74	$2.82	$2.05	$1.82	$2.54
Diluted	$6.43	$4.64	$3.51	$3.33	$3.67	$2.77	$2.01	$1.79	$2.50
Shares used in computing earnings per share:
Basic	919,294	914,555	912,197	907,548	903,542	898,032	893,712	891,180	889,142
Diluted	933,154	928,825	927,361	922,878	919,783	914,374	909,160	902,993	901,494