A day after Apple failed to beat Wall Street revenue expectations for the first time since 2002, analysts are trying to explain what happened. The potential culprits range from iPhone 5 rumors to the tech giant just needed a breather.
Despite the loss of Steve Jobs as Apple’s CEO, no early analyst postmortem of yesterday’s quarterly financial report hinted at leadership being a reason for the revenue stumble. Indeed, high-profile Piper Jaffray analyst Gene Munster said “Apple had another impressive quarter,” aside from the less-than-stellar iPhone sales. Mac sales grew 26 percent during a time when PC demand is low and iPad demand skyrocketed 166 percent versus the same time in 2010. Additionally, the next 9 months should see only more iPhone sales as consumers shift their focus to buying the iPhone 4S, the holiday buying period and waiting for the iPad 3 and iPhone 5.
You could tell how ISI Group’s Brian Marshall took the quarter’s iPad sales numbers. He told investors he found it “hard to believe” the disappointment over Apple’s tablet sales. Marshall retained a “Buy” recommendation on Apple stock which he kept at a $500 target price.
Brian White of Ticonderoga, borrowed from a blockbuster Hollywood movie to explain the the sales pause, telling investors “Apple Experiences a ‘Black Swan’ As Consumers Wait for the iPhone 4S. A black swan is also a rare event that takes onlookers by surprise.
“Essentially, we believe the iPhone pause going into the launch of the iPhone 4S was the culprit for this miss,” he writes. He expects Apple’s next quarter to be “stronger than typical” fueled by the launch of iPhone 4S sales. He gives Apple a “Buy” rate, providing a $666 price target.
Deutsche Bank’s Chris Whitmore uses White’s pause in a mountain-climbing metaphor, telling investors “Even mountain climbers need a breather,” a reference to Apple’s stratospheric rise. Whitmore said Apple itself is somewhat to blame for the iPhone sales dip, having indicated consumer anticipation of a new handset could impact demand in the fourth quarter. He also said carrier’s waiting to announce iPhone support until the iPhone 4S was released could have slowed international sales.
September was a transitional month for iPhone sales, a factor Wall Street underestimated, according to Morgan Stanley’s Kay Huberty. However, she reassured investors, saying she doesn’t “see the light iPhone shipments as a cause of concern.” Why? Most importantly, Apple still provided revenue guidance for the calendar fourth quarter higher than Wall Street consensus. Additionally, despite the drop-off in fourth-quarter iPhone sales, it won’t hurt gross margins.
Just Ashok Kumar of Rodman & Renshaw believes Apple may not be able to shake off this sales dip. After noting “MacBook Air sales likely cannibalized iPad demand,” Kumar expects “slower but sustainable growth for the iPad 2” with Apple having 75 percent of the tablet market share.
