Numbers don’t lie: New insight into Apple’s killer pipeline


There are a lot of reasons to be excited about Apple right now, but if you believe Morgan Stanley analyst Katy Huberty, we’re just getting started.

Based on Apple’s quarterly SEC filing, Huberty believes Apple’s revenue is set to explode over the coming quarters, since she claims Cupertino’s off-balance sheet commitments “confirm major product ramps later this year.”


An off-balance sheet commitment refers to third-party manufacturers, component purchases, commitments for product tooling/manufacturing process equipment, advertising, research and development, and Internet and telecommunications services.

Huberty notes that Apple’s total spending in all of these areas has climbed 46 percent yearly and 36 percent quarterly in Q3 2014 — with the jump being the biggest spending increase since Apple first launched the iPhone way back in 2007.

She attributes this increase to new products like the eagerly-anticipated iWatch, as well as to the impending arrival of the iPhone 6, which is set to launch in 4.7-inch and 5.5-inch variants. Business Insider notes that historically off-balance sheet commitments have a 97 percent correlation with revenue growth.

All in all, the message is that you ain’t seen nothing yet when it comes to Apple in 2014. Looks like Eddy Cue was right on the money when he claimed Apple had its most exciting product pipeline in a quarter century.

  • JEBworks

    And I’m sure some analysts will find some hair in this soup too, just to knock Apple!

  • brisully

    Couldn’t that blip be the new HQ???

    • VotersRights

      And they keep expanding/building new clean power sources. I don’t know if they are listed under off balance on their filings though, but they are certainly investing more money in infrastructure than ever before.

    • andrewi

      “third-party manufacturers, component purchases, commitments for product tooling/manufacturing process equipment, advertising, research and development, and Internet and telecommunications services.”

      You don’t enlist manufacturers, buy components, and purchase lanes at semiconductor companies (that’s what tooling commitments means) to build HQs and power sources. If you are Apple, it’s a senseless waste of money because you would then have to hire all the builders yourself and teach them how to construct using your freshly made technology, you contract the building out to architects and they do that for you, so it would never appear on your payroll as anything other than building expenses.

      If they are buying new semiconductor lanes, they are building a new chip. That, I’m afraid, is fact. Lanes are not cheap (100’s of millions). Something is coming next quarter and that analyst has checked the data with all prior releases and confirmed with 97% accuracy that this is precisely what happened before all other launches.

      In other words, someone has figured out how to tell when Apple spends it’s first dollars to pay for the manufacturing services before it starts stockpiling new product for release.

  • M S

    Finally, different phone-sizes!
    What will they invent next?

  • Troy Haliwell

    Man, I am hoping for a Mini refresh, but also know that Intel is having production issues with Broadwell chips that is pushing delivery to the fourth quarter this year, first quarter next.

About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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