January | 2013 | adanac investment lab

We estimate Apple’s financial performance for its most recently completed quarter as follows: Continue reading

Shortly after the original iPad came out, Apple forecasted a 570 basis point decline in gross margin for Q3 2010. Management stated that due to iPad’s aggressive pricing strategy, it would contribute to about 25% of the forecasted gross margin decline (143bp). Continue reading

The purpose of this exercise is to perform an analysis on Q1 2013 iPhone performance relative to Q1 2012. This analysis is separated into three components:

  1. Availability
  2. Launches and unit sales
  3. Supply, demand, and margins Continue reading

The purpose of this analysis is to highlight and demonstrate the potential impact of currency fluctuations in key regions on Apple’s Q1 2013 earnings.

Management has regularly mentioned in earnings calls that a stronger US dollar negatively impacts gross margins in a given quarter. The reasons for this are explained in more detail in Apple’s 10-K filing for FY 2012, and summarized below: Continue reading

When the iPhone was first released in 2007, it was accounted for in a very unrepresentative way: iPhone revenue was deferred over a period of two years (8 quarters), on a daily basis. That is, for any given iPhone sold, a maximum of 12.5% of the proceeds could be recognized as revenue in the quarter of sale.

The purpose of this analysis is to reasonably estimate the portion of iPhone and iPad revenue that is deferred, and to determine the amount of deferred revenue that is to be recognized in Q1 2013. This analysis will also estimate a breakeven point – the level of Q1 2013 iPhone and iPad revenue required to make the impact of Apple’s current deferred revenue policy net neutral to EPS. Continue reading

Apple has a long-standing record of beating its forecasted gross margin for a given quarter. The purpose of this piece is to provide an illustrated analysis of the factors affecting the variance between forecasted and actual gross margin as identified in earnings conference calls.

Below are charts demonstrating Apple’s revenue and gross margin by product for fiscal 2012:

Figure 1: Apple’s FY2012 revenue by product

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