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Tuesday, January 22, 2008

Apple's "fake" guidance

On January 12, 2005 Apple reported earnings and gave this guidance:

“We’re pleased to report 74 percent revenue growth, 26 percent Mac unit growth and 525 percent iPod unit growth,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second quarter of fiscal 2005, we expect revenue of about $2.9 billion and earnings per diluted share of about $.40.”

Revenues were $3.24 billion, and earnings were .68 cents. On April 13, 2005, Apple gave this for guidance:

“Looking ahead to the third quarter of fiscal 2005, we expect revenue of about $3.25 billion and earnings per diluted share of about $.28.”

Revenue was $3.52 billion, and earnings were .37. On July 13, 2005 Apple gave this guidance:

“Looking ahead to the fourth quarter of fiscal 2005, we expect revenue of about $3.5 billion and earnings per diluted share of about $.32.”

Apple posted revenue of $3.68 billion and a net quarterly profit of $430 million, or $.50 per diluted share. On October 11, 2005 Apple gave this guidance:

“Looking ahead to the first quarter of fiscal 2006 which will span 14 weeks, we expect revenue of about $4.7 billion. We expect GAAP earnings per diluted share of about $.46, including an estimated $.03 per share expense impact from non-cash share-based compensation, translating to non-GAAP EPS of about $.49.”

Apple posted revenue of $5.75 billion and a net quarterly profit of $565 million, or $.65 per diluted share, in this 14-week quarter. On January 18, 2006, Apple gave this guidance:

“Looking ahead to the second quarter of fiscal 2006, we expect revenue of about $4.3 billion. We expect GAAP earnings per diluted share of about $.38, including an estimated $.04 per share expense impact from non-cash stock-based compensation, translating to non-GAAP EPS of about $.42.”

The Company posted revenue of $4.36 billion and a net quarterly profit of $410 million, or $.47 per diluted share. On April 19, 2006 Apple gave this guidance:

“Looking ahead to the third quarter of fiscal 2006, we expect revenue of about $4.2 to $4.4 billion. We expect GAAP earnings per diluted share of about $.39 to $.43, including an estimated $.04 per share expense impact from non-cash stock-based compensation, translating to non-GAAP EPS of about $.43 to $.47.”

The Company posted revenue of $4.37 billion and a net quarterly profit of $472 million, or $.54 per diluted share. On July 19, 2006 Apple gave this guidance:

“Looking ahead to the fourth quarter of fiscal 2006, we expect revenue of about $4.5 to $4.6 billion. We expect GAAP earnings per diluted share of about $.46 to $.48, including an estimated $.03 per share expense impact from non-cash stock-based compensation, translating to non-GAAP EPS of about $.49 to $.51.”

The Company posted revenue of $4.84 billion and net quarterly profit of $546 million, or $.62 per diluted share. On October 18, 2006 Apple gave this guidance:

“Looking ahead to the first fiscal quarter of 2007, we expect revenue of $6.0 to $6.2 billion and earnings per diluted share of $.70 to $.73.”

The Company posted record revenue of $7.1 billion and record net quarterly profit of $1.0 billion, or $1.14 per diluted share. On January 17, 2007 Apple gave this guidance:

“Looking ahead to the second fiscal quarter of 2007, we expect revenue of $4.8 to $4.9 billion and earnings per diluted share of $.54 to $.56.”

The Company posted revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share. On April 25, 2007, Apple gave this guidance:

“Looking ahead to the third fiscal quarter of 2007, we expect revenue of about $5.1 billion and earnings per diluted share of about $.66.”

The Company posted revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share. On July 25, 2007, Apple gave this for guidance:

“Looking ahead to the fourth fiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $.65.”

The Company posted revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share. On October 22, 2007 Apple gave this guidance:

“Looking ahead to the first quarter of fiscal 2008, we expect revenue of about $9.2 billion and earnings per diluted share of about $1.42.”

The Company posted revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share. Today Apple gave this for guidance:

"Looking ahead to the second quarter of fiscal 2008, we expect revenue of about $6.8 billion and earnings per diluted share of about $.94.”

In Apple's 10Q, they have this to say about their Performance-Based Cash Incentives:

The performance goals are aggressive. Thus, there is considerable risk that payments will not be made at all or will be made at less than 100%. For the past three years, the performance goals have reflected double-digit growth in both revenue and operating income.

It is apparent, that Apple has always exceeded their posted estimates. It would be interesting to see what the performance goals are of the Performance-Based cash incentives; otherwise, why would Apple continually spew out "guidance" that isn't?

I guess the moral of this exercise is that you don't buy their guidance, or sell your stock on it.

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