Estimating Fourth Quarter Earnings for Apple

We expect revenue to be about $18 billion compared to $12.2 billion in the September quarter last year. We expect gross margins to be about 35%…

We are targeting EPS of about $3.44.

via Apple Inc. AAPL Q3 2010 Earnings Call Transcript.

That $18 billion figure is extraordinary.  Consider that last year during the same quarter, the company received $12.2 billion, then the sales growth forecast is about 50%.  Granted that even though Apple just achieved 61% sales growth last quarter, Apple management is unusually aggressive in underestimating.

Given this, I am looking at the following forecast:

  • iPhone units: 12.2 million (65% growth)
  • Macs: 4 million (30% growth)
  • iPads: 3.3 million (flat sequentially, production constrained)
  • iPods: 9.4 million (-8% growth)
  • Music growth: 26.7%
  • Peripherals growth: 21%
  • Software growth: 8%
  • Total sales: $19.0 billion (56% y/y growth)
  • GM: 42.3%
  • EPS: $4.78 (73% y/y growth)

If this estimate proves correct, then at the end of the quarter (Oct 1) the trailing twelve months’ earnings per share will be $15.29.  That is equivalent to P/E of 16.82 on the back of four quarters of earnings growth (47%, 86%, 75% and 73% respectively).  The price/earnings excluding cash would be 13.4.


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