Unit Sales In The Apple Industrial Era

Introduction
Apple is at the threshold of becoming the largest US-based technology company and may soon become the largest technology company in the world. This post details the unit sales for the Apple iPhone, iPod and Macintosh personal computers over the most recent eleven fiscal quarters and iPad unit sales for the five fiscal quarters the product has been in commercial release. Apple's dynamic growth is fueled by three major product lines while the Apple iPod, once Apple's flagship product line, slowly fades into history as the product that sparked the company's renaissance and set the stage for what is now the Apple industrial era.

Over the past five years Apple's frenetic rates of growth have been derived from a changing mix of products leading to global leadership in the personal technology markets. This changing mix of products provides for years of dynamic growth as the company expands its global reach, expands the global presence of Apple's retail stores and expands product distribution into previously under served regions of the world.

In Apple's current fiscal year (FY 2011) ending in September and the fiscal year beginning at the end of that month, unit sales of the iPhone and iPad will generate more than two-thirds of the company's reported revenue. Both of these products were introduced to the market within the past five years. The popularity of Apple's iOS-based devices, including the Apple iPod touch, has masked the fact that the Macintosh line of personal computers has become a more than $20 billion global business and in FY 2012 close to 20 million Macintosh computers may be sold.

The Apple iPhone

There's no disputing the fact the iPhone is Apple's biggest revenue product. In the recent June quarter, sales of iPhones and related products and services generated about 46.6% of Apple's $28.571 billion in reported revenue. Over the most recent four fiscal quarters the Apple iPhone generated 44.75% of Apple's $100.322 billion revenue total. The June quarter's 142% unit sales growth and 150% revenue growth for the popular iPhone were well above analyst expectations. 

The chart below illustrates the consistent unit sales growth of the Apple iPhone with the June quarter (FQ3) of FY 2010 the obvious exception due to the unique issues surrounding the illicit publication of iPhone 4 photos prior to the product's release and Apple's aggressive pull back on shipments of the iPhone 3GS ahead of the iPhone 4's commercial debut in June of that year. In that quarter more iPhones were sold to customers than Apple shipped into the market for sale, reducing channel inventory in preparation for the iPhone 4's debut. 

I expect the release of the iPhone 5 to spark sales of over 30 million units (all iPhone models combined) within the 90 days of the iPhone 5's release date. A pending deal with China Mobile will propel unit sales to levels not seen before even by iPhone standards.

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

Apple: Ten Quarters of Product Unit Sales

The objective of the Posts At Eventide web presence is to benefit readers seeking to understand Apple's financial performance and to serve as a repository of information and analysis for other independent AAPL analysts preparing quarterly estimates and share price forecasts. 

This is one of a series of posts designed to provide data and historical context for the development of quarterly unit sales estimates for Apple's major hardware device product lines.  This post details the unit sales for the Apple iPhone, iPod and Macintosh personal computers over the most recent ten fiscal quarters and iPad unit sales for the four fiscal quarters since the product has been in commercial release. 

The Apple iPhone

There's no disputing the fact the iPhone is Apple's biggest revenue product. In the recent March quarter the sales of iPhones and related products and services generated almost 50% of Apple's $24.667 billion in reported revenue. Led by a 155% increase in domestic unit sales, the popular smartphone performed better than most analysts expects with a 113% increase in global unit shipments to 18.647 million. 

While there is seasonality in the iPhone's unit sales performance, the outcome is more often determined by product supply rather than seasonal variations in demand. Apple's inability to produce sufficient quantities of iPhones to meet global demand following the product's annual refresh cycle has hampered unit sales in the third and fourth fiscal quarters of the year.  

The chart below illustrates the consistent unit sales growth of the Apple iPhone with the June quarter (June quarter) of FY 2010 the obvious exception due to the unique issues surrounding the illicit publication of iPhone 4 photos prior to the product's release. Apple pulled back on shipments of the iPhone 3GS ahead of the iPhone 4's commercial debut. 

		Unit Sales	iPhone	Sequential	YOY
		FQ1 ’09	4,363	-36.69%	88.47%
		FQ2 ’09	3,793	-13.06%	122.72%
		FQ3 ’09	5,208	37.31%	626.36%
		FQ4 ’09	7,367	41.46%	6.89%
		FQ1 ’10	8,737	18.60%	100.25%
		FQ2 '10	8,752	0.17%	130.74%
		FQ3 ’10	8,398	-4.04%	61.25%
		FQ4 '10	14,102	67.92%	91.42%
		FQ1 ’11	16,235	15.13%	85.82%
		FQ2 '11	18,647	14.86%	113.06%

12 Quarters of Mac, iPhone and iPod Unit Sales

12 Quarters of Mac, iPhone and iPod Unit Sales

As an independent analyst I rely heavily on historical data in developing estimates of Apple's future performance. In an October blog post titled Apple's FY2010: A Retrospective I looked at the revenue contributions of each of the company's major product lines. 

Today I'm publishing in table and graph form the unit sales for the Mac, iPhone and iPod  product lines for the most recent twelve fiscal quarters, from FQ1 2008 through FQ4 2010. The numbers are published with little need for analysis. The graphs are each worth 1,000 words. 

I will be updating my CY 2011 AAPL Price Target and Price Forecasts following the release of FQ1 2011 results on January 18th. In the meantime, the table data and graphs in this blog post illustrate Apple's foundation for continuing growth. In FY 2011 (ending in September), I expect Apple to report over $100 billion in revenue and earnings per share at or above $25. Apple's foundation for strong revenue and earnings growth isn't built on any one product line. Although the Apple iPhone and the Apple iPad will generated more than 50% of the company's revenue this fiscal year, each of the company's major revenue segments materially impact overall results. 

The Macintosh

While much attention has been placed on the Apple iPhone and Apple iPad, the Macintosh line of personal computers continues to contribute heavily to the company's overall results. In FY2010 the Macintosh line represented 27% of the company's reported revenue and in the fiscal year unit sales rose 31%. In FY2011 I expect the Mac's strong unit sales growth to continue and for the line to represent roughly 20% of the company's reported revenue for the fiscal year. 

		Unit Sales	Mac	Sequential	YOY
		FQ1 ’08	2,319	7%	44%
		FQ2 ’08	2,289	-1%	51%
		FQ3 ’08	2,496	9%	41%
		FQ4 ’08	2,611	5%	21%
		FQ1 ’09	2,524	-3.33%	8.84%
		FQ2 ’09	2,216	-12.20%	-3.19%
		FQ3 ’09	2,603	17.46%	4.29%
		FQ4 ’09	3,053	17.29%	16.93%
		FQ1 ’10	3,362	10.12%	33.20%
		FQ2 '10	2,943	-12.46%	32.81%
		FQ3 ’10	3,472	17.97%	33.38%
		FQ4 '10	3,885	11.90%	27.25%

Preliminary AAPL FQ1 Estimates (Updated 11/27/10)

Update: Please see the Posts At Eventide AAPL FQ1 Estimates Posted January 2, 2011


Preliminary AAPL FQ1 Estimates (Updated 11/27/10)

On November 13th I published my preliminary AAPL FQ1 estimates. Please see this original post for a comprehensive overview of my estimates for each of Apple's major revenue segments. 

In this post I'm covering the updates to my preliminary mid-November estimates. As an independent analyst and moderator of the Apple Finance Board I'm posting estimates and my updates as a catalyst for discussion of anticipated December quarter results. These estimates are subject to change and most likely will be revised in the coming weeks as we approach the end of the quarter. These updates are being published with roughly one month remaining in the three-month fiscal period. 

FQ1 Revenue and Earnings Estimates

For the December quarter my updated models forecast revenue of $26.511 billion and earnings per share of $6.00. This represents an expected 69% jump in revenue and a 63.5% rise in earnings per share.

The pace of eps growth trails revenue growth due to the estimated 37.5% gross margin this December quarter versus the 40.9% gross margin in the prior-year period. This drop in the gross margin ratio has a material impact on the relationship between revenue and earnings growth. The eps performance in the December quarter includes a benefit from a drop in effective tax rates from the December quarter one year ago.

Apple has become more aggressive on product pricing relative to build costs. It's my view the moderation in gross margins is intended to promote growth in after-purchase revenue from the sales of apps and content. The more units sold the more future revenue generated from units sold.