Photo: Asa Mathat, All Things Digital
Apple will likely report another blowout Christmas quarter this afternoon when it reports Q1 results.But the focus of everyone’s attention won’t be on that, or on Apple’s guidance, which could be especially strong this time around. (Join us HERE for live coverage, beginning at 4 p.m. ET.)
Instead, everyone is going to want to know what’s wrong with Apple CEO Steve Jobs, who announced an indefinite medical leave yesterday, his second leave in 2 years. Unlike during Jobs’ last leave in 2009, he didn’t say anything about when he thinks he’ll be back, leaving many to wonder if he actually plans to return at all.
Apple has a talented, experienced management team, and this year’s product launches should be fine — particularly the new version of the iPhone and the iPad 2. But the worry about Apple is that without Steve Jobs fully participating in the business, in a few years, the company could lose its edge.
So it may be time for Apple to finally say something on the record about a succession plan.
Key Stats: (Via Yahoo Finance and Piper Jaffray)
- Revenue: $24.4 billion consensus, $25.5 billion “high” Street estimate
- EPS: $5.38 consensus, $6.02 “high” Street estimate
- iPhone shipments: 15.5 million consensus
- iPad shipments: 6.2 million consensus
- Mac shipments: 4.3 million consensus
- iPod shipments: 20.3 million consensus
- March revenue guidance: $20.6 billion Street consensus, anything over $20 billion solid
- March EPS guidance: $4.43 Street consensus, anything over $3.92 solid
Since Sept. 2006, Apple has topped its quarterly EPS guidance by an average 41%, and its revenue guidance by an average 9%.
Based on Apple's December quarter guidance of $4.80 EPS and $23 billion in sales, history suggests Apple should report EPS of about $6.77 on $25 billion of revenue.
But the EPS number could be hard to reach. That's because much of Apple's growth is coming from the iPad, which is a lower-margin business than the iPhone.
Consensus sits at $5.38 for EPS and $24.4 billion in revenue.
The iPad is a wild card for Apple -- it could have had a HUGE quarter or just an 'OK' quarter. This is its first Christmas, so no one really knows. And a lot of people may be waiting for the iPad 2 already, which could have hurt iPad sales.
Apple got off easy last quarter for missing its iPad numbers because supply wasn't in tune with demand. But now the supply issues seem to have gone away. So let's see how big the iPad really is.
Either way, Apple almost certainly sold its 10 millionth iPad last quarter, in less than a year of sales. Impressive.
That would represent 91% year-over-year growth -- pretty huge -- and almost 40% of Apple's sales for the quarter.
And the new Verizon iPhone, of course, doesn't count in last quarter's numbers.
But a disappointment here would scare people.
The latest stats from NPD Group, via a note from Piper Jaffray's Gene Munster, suggest Apple may only report in-line Mac numbers. (Consensus represents 24% year-over-year growth.)
Upside would likely come from the new MacBook Air, which looks like a big hit.
Apple tends to give absurdly conservative guidance, so it's hard to tell how investors will react.
The new Verizon iPhone, which ships next month, could lead Apple to issue stronger than anticipated guidance. The iPad 2 probably won't ship until the June quarter, which means Apple's margins may actually improve during the March quarter.
Apple's nuance on the Steve Jobs situation -- if they discuss it at all -- could be what moves the stock the most.
If it sounds like he might actually be OK long-term, shares could rally. If the situation sounds grave, shares could slide.
Maybe Apple will disclose more about his condition. Maybe they'll say something on the record about a succession plan. Or -- most likely -- maybe they won't say anything.