This chart comes from Katy Huberty of Morgan Stanley. It’s based on her reading of Apple’s latest quarterly filing with the SEC.
She says the off-balance sheet commitments “confirm major product ramps later this year.” As you can see, it would therefore also confirm Apple’s revenue is going to explode.
What is an “off-balance sheet commitment”?
Huberty says the off-balance sheet commitments are for third-party manufacturers, component purchases, commitments for product tooling/manufacturing process equipment, advertising, research and development, and internet and telecommunications services.
The commitments for third-party manufacturers and component purchases were $US15.4 billion at the end of the June quarter, which was up 22% on a quarter-over-quarter basis. Commitments for the rest of it — product tooling/manufacturing process equipment, advertising, research and development, and internet and telecommunications services — was $US5.6 billion, up 100% on a quarter-over-quarter basis.
That makes the total commitment $US21 billion, which is the highest since just before the iPhone 5 launched. (After scanning Apple’s 10-Qs, we think this is the highest ever for a June quarter.) The growth of the total commitments is 46% on a year-over-year basis. On a quarter-over-quarter basis, commitments were up 36%, which is the highest sequential growth for a June quarter since 2007 when Apple started selling the iPhone, says Huberty.
She believes this ramp in commitments means two things: 1. The iPhone 6 is going to be really big, and Apple is ramping up for it. 2. Apple has the iWatch coming, and it’s buying tools for its manufacturing partners to start cranking out iWatches.
There’s a risk that she’s using the numbers to justify her own opinions on Apple’s product roadmap. But, historically, the off-balance sheet commitments have a 97% correlation with revenue growth. This year, Apple ramped off-balance sheet commitments earlier than usual, which Huberty thinks is evidence that it’s getting ready to launch the iWatch, which is a new product category.
All of that said… You don’t really need a chart or a peek at off-balance sheet commitments to figure revenue is ready to spike. All reports point to a big iPhone release this fall, an iWatch, maybe a new Mac, and possibly something in the payments space. Those things are naturally going to generate record levels of revenue for Apple.
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