Sunday, June 5, 2011

Preliminary numbers for the June quarter


We are about a month and a half away from the July news conference that Apple reports their Fiscal Q3 earnings.  Here are a few statistics that might be interesting and my predictions.

Revenue - The last 5 Q3 year over year percentage increases and consecutive quarter increases are as follows: (YOY in blue)

2006 - 24% - 0%
2007 - 27% - 5%
2008 - 36% - 0%
2009 - 29% - 7%
2010 - 61% - 14%
2011 - 77% - 11% - projected..

27.830 billion is the number - driven by international sales of the iPhone and the full ramp up to fulfill "the mother of all backlogs" on the iPad.

EPS will be at 6.95 which is a 98% YOY increase
iPhones - 18.900 million - 125% YOY increase
iPads -  - - -9.810 million - 200% YOY increase
Macs - - - -  4.337 million -   25% YOY increase
iPods - - - -  9.000 million -     4% YOY decrease
GM - 40.7%
International sales - 65%

I know that the macro economic view right now is quite bearish with the US job growth numbers in the tank, coupled with the woeful real estate market. You also have the Japan disaster and concerns about the Euro, Greece, and the rest of that quagmire.  I do not believe that any of these factors restrict Apple's ability to grow their sales. They continue to build stores all over the US and the world.  They are expanding every day, and will continue to expand until they reach world dominance.  It's the international sales that are fueling the massive growth right now, and this will continue at this pace until they have reached saturation in China.  What's crazy is that Apple is no where near China saturation.  They're working on it, but they have a ways to go.  What will it look like when China has half as many stores that the US has?  USA has roughly 236 Apple stores, and there are another 87 spread out around the rest of the world with only 5 stores in China. Can you imagine 118 stores in China?  We've truly got a couple more years of this type of growth.

Speaking of international sales - here is the history since 2006 in quarters from Fiscal Q1 to fiscal Q4:

all numbers are percentages

2006 - 40 / 43 / 39 / 40
2007 - 42 / 43 / 40 / 40
2008 - 45 / 44 / 42 / 41
2009 - 46 / 46 / 44 / 46
2010 - 58 / 58 / 52 / 57
2011 - 62 / 58 / 65....

Just look at the pattern - In all of 2010, international sales said good bye to the 40% range, and in Q1 of 2011, broke through 60% for the first time ever!   At this rate, we'll break through 70% in 2012 by Q2 or Q3...  because of the China dynamic.

Here's another thought -

I invested in Apple back in 2004 because I wanted to bet on who would win the battle of media convergence.  Of course, there will be more than one winner, but I wanted to pick the one company that had the vision to converge television and internet with movies and everything else, and find a way to deliver it seamlessly to us consumers.  I picked Apple because of the way that they entered the music business with the iTunes store, and of course the ipod.  It looked to me at that time, that Apple had a long term vision, and I thought that they had the biggest head start by designing world class software with the usual excellent hardware designs. In addition to that, they already had ALL those people used to buying media through iTunes.  It just looked like they were the ones to do it.

Now enter the iPhone in 2007.  Apple decides to give you the ability to make phone calls and access your media all in one device.  Add the app store with 300,000 choices of tools and games to use, and I'm starting to see this convergence thing unfold before my eyes..

The iPad is next in 2010 - Facetime and TV with movies, and everything else - all on a 10" screen..

OK - while this is happening, the majority of people are still hooked to cable and satellite.  But guess what?  People use their DVR's and watch shows at their own convenience, in the time that is available to them.  My wife and I do that..  We DVR the shows we like and watch them later for all of the conveniences that we all enjoy.  You can plan your life the way you want to - Exercise and play whenever you want.. your shows are waiting for you.

The problem with all of this is - how do you manage all of this? It's too expensive and It's all scattered on different devices, and I don't know about the rest of you, but my hard drive fills up fast.

Tomorrow - Enter the iCloud - Another giant leap towards full convergence.

Imagine this.... 3 years from now:

You come home from work after a a hard day..  You throw on your running / walking shoes, and run/walk around town for 45 minutes or so.. That's done, now you want to sit down with your family, eat and watch your favorite show.

Right next to your chair is one of your iPads.  You check out your iCloud service and see that you have a couple of your favorite shows that have been automatically downloaded.  (Of course, you already knew this - you were expecting it, because YOU set it up)

You tell iCloud that you want to watch this show on iTV - Yes, that's right - your iTV. It looks just like your iPad, except it's 40" and is hanging on the wall like any flat screen TV. So you put your iPad down, and turn on your iTV to watch your show.  Junior doesn't like to watch Justified, so he goes in the other room, and watches what he wants on his iPad, or maybe he wants to do some gaming.

This is the future of our world, and Apple is winning big.

Dennis Hildebrand

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