Apple could beat the Street next year
Posted
Nov 17 2008, 10:58 AM
by
Kim Peterson
Rating:
Analyst estimates are too high across the board, but Apple is, as usual, the exception. Analysts have been ratcheting down their expectations for Apple in its 2009 fiscal year, and now the company is poised to beat those expectations -- economy be damned.
Analysts expect Apple's 2009 earnings to be $5.35 per share on $37.5 billion in revenue. This pessimistic consensus has primed Apple to beat revenue expectations by $900 million a quarter in 2009, according to Andy Zaky of the Bullish Cross blog. Zaky's not a Wall Street analyst, but he's more accurate than many of them when it comes to pinning down Apple's numbers.
The biggest problem with current estimates, Zaky writes, is that they don't anticipate growth in unit sales for any of Apple's product lines. And they don't factor the giant pot of deferred revenue that Apple doesn't immediately recognize from iPhone sales. (It actually takes two years for Apple to completely move the revenue from an iPhone sale onto its books).
When you take out the deferred revenue from analyst estimates, Zaky writes, you find out that analysts think Apple will grow revenue only by $1.9 billion in 2009. (Apple's 2008 fiscal year ended in September, so it's already on the first quarter of its 2009 fiscal year.)
That's a 5.9% growth rate, even though each of Apple's product segments are growing much faster than that.
"While a moderate to deep recession will undoubtedly affect Apple's business, the natural growth rate and penetration in even a flat economic environment will offset the negative effects of a slowdown. Unless we're talking 10-12% unemployment and 5-6% negative GDP growth throughout 2009, the analyst consensus simply makes no sense."
Related reading:
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Apple's accounting makes GAAP numbers worthless
Apple shares up after remarkable quarter
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