Apple (AAPL) reports December quarter earnings next Wednesday, so Wall Street’s estimate revisions are rolling in. We’ll update our models this week, but for now, we’ll share some of the reports we see.
The latest: Citi analyst Richard Gardner takes a red pen to his estimates for the next three fiscal years — “to reflect a more conservative view of consumer spending” — and suggests December quarter iPhone sales could be down signficantly from the previous quarter.
- Gardner thinks Apple’s December quarter revenue could be “several hundred million” below the Street’s $9.9 billion consensus. We’ll review our model and publish our thoughts this week.
- But he thinks Apple’s margins could be 32%-33% — better than expected — leading to EPS of $1.42, versus $1.39 consensus. That would beat Apple’s guidance of $1.06-$1.35, but would still be significantly below the $1.65 the Street predicted in October.
- “Checks” suggest 4 million iPhones shipped in December quarter, versus 6.9 million in September quarter. That’s a 43% quarter-over-quarter drop. iPhone shipments will probably drop some quarter-over-quarter — the September numbers include 2 million phones worth of channel fill (29% of total) and huge, pent-up demand for the iPhone 3G. But the December quarter shipments also include Christmas sales and some channel fill, including Walmart.
- Gardner expects Apple to offer “conservative” March quarter guidance, “well below the current consensus.” Specifically, he thinks Apple will guide revenue $7 billion to $8 billion, versus the Street’s $8.33 billion consensus. He also thinks Apple could guide EPS 18-48 cents below the current $1.13 consensus. That wouldn’t surprise us; last quarter, Apple guided 30-59 cents below consensus.
That said, Gardner thinks Apple is cheap. If the stock pulls back another $7 or $8 around earnings, “we would be aggressive buyers.”