Hints of an Apple Blowout This Quarter

Last quarter, the unthinkable happened to Apple (Nasdaq: AAPL  ) . The Mac maker -- gasp! -- missed Street expectations for its fourth-quarter report. How dare Cupertino not blow estimates out of the water in continuation of its long string of beats?

Kicking off 2012 with first-quarter results will commence promptly after market close on Jan. 24, so mark your calendars accordingly. Will the darling whiff again? Or will it resume its habit of handily destroying projections?

Much of the miss was attributed to would-be iPhone buyers who delayed their purchases amid the media's sensationalizing of the iPhone 5, which turned out to be the iPhone 4S. That pent-up demand was released with a vengeance upon launch weekend, boding well for Apple's prospects this quarter.

With earnings starting to come in for companies within Apple's supply chain, those figures provide even more clues that Apple is about to post a blowout.

Multi-Fineline Electronix (Nasdaq: MFLX  ) recently reported preliminary earnings results that came in better than expected. The company supplies Apple with printed circuit boards for its gadgets, including the iPhone and iPad. Multi-Fineline attributed its strength to "an increase in shipments to our largest key customer."

Virtually all of MFLEX's sales -- 99% of sales last year, to be precise -- come from four customers, including Apple, Motorola Mobility (NYSE: MMI  ) , and Research In Motion. I think it's fair to guess that the key customer seeing increasing shipments isn't Motorola or RIM, since Motorola recently just guided revenue below estimates and the PlayBook is a zombie.

Fellow Apple supplier Cirrus Logic (Nasdaq: CRUS  ) similarly put up jolly digits, thanks to its relationship with Cupertino. As the supplier for audio codecs in iDevices, it's not a stretch to gather that iOS gadgets had happy holidays.

Carrier partners like Verizon (NYSE: VZ  ) and AT&T have been reporting strong iPhone sales. Big Red said it helped move 4.2 million units, taking a hit on margins in the process, while Ma Bell said it was on track to top its smartphone quarterly sales record, led by the iPhone 4S.

Apple kicked off last fiscal year with more than 16.2 million iPhone unit sales, and estimates for this quarter go as high as 36 million, which would represent a 122% jump. That would be an acceleration from the 86% unit sales growth put up last year, but this has also been the fastest global iPhone rollout ever, and demand has shown no sign of slowing down.

With evidence mounting, I think we can expect Apple to make up for last quarter's whiff and then some.

Speaking of component suppliers and iOS leading the mobile revolution, some winners are hard to see -- because they're buried inside the gadgets. The proliferation of mobile gadgets is going to be breathtaking, and a handful of companies stand to rake in the profits as consumers snap up each year's latest and greatest models. We've just released a new special free report on "3 Hidden Winners of the iPhone, iPad, and Android Revolution." In it, you'll find three companies that supply crucial components that virtually every mobile device relies on. Check it out now -- it's free.

Fool contributor Evan Niu owns shares of Verizon Communications, AT&T, and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Cirrus Logic and Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (69)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 16, 2012, at 10:37 PM, dwilh51183 wrote:

    APPLE DIDN'T MISS LAST QUARTER! ARE YOU SERIOUS??? WHAT OTHER COMPANY IN THE WORLD MAKES OVER 1 BILLION DOLLARS IN FREE CASH FLOW EVERY 3 MONTH'S? EXXON...HMMM

    SO APPL REPORTS A PROFIT OF 5 1/2 BILLION DOLLARS , WHICH IS 5 1/2 X BETTER THAN WHAT EXXON MAKES, AND THAT'S CONSIDERED A BAD QUARTER. AAPL SHOULD HAVE TRADED UP $35.00 A SHARE IN THE AFTER HOURS, INSTEAD OF FALLING.I'M TIRED OF HEARING THE CRAP ABOUT HOW APPLE CANT KEEP UP THE RECORD SALES. AAPL IS A DYNASTY LIKE UCLA AND JOHN WOODEN

  • Report this Comment On January 17, 2012, at 6:15 AM, Resphigi wrote:

    @ dwilh51183 - Apple didn't miss it's own earnings guidance last quarter, but as the article states, it did miss the street's consensus estimate. The street was probably tired of getting sandbagged by Apple consistently low-balling itself, which for a change, didn't happen last quarter.

  • Report this Comment On January 17, 2012, at 12:07 PM, Jaminon wrote:

    The word I hear from a few friends working in the stores both in the US and UK, is that sales for Q4 are about 15%+ over Apple estimates. Hardly a comprehensive survey but interesting nonetheless

  • Report this Comment On January 17, 2012, at 5:10 PM, Hawmps wrote:

    ALL CAPS? really? I couldn't read past the first question mark. Someone please translate.

  • Report this Comment On January 18, 2012, at 5:31 PM, rbraseth wrote:

    I work two blocks away from the Chicago AAPL flagship store on Michigan Avenue. I realize one store doesn't make a story, but I've watched store traffic for three years. I've never seen more. I talk to the sales people on the floor and although they are not privy to hard sales numbers, each tells me they've personally sold more than last year. The new phones flew out of the store.

    There are two product launches scheduled for 2012.

    AAPL hasn't touched China yet (we all saw what happened). I don't give a rip what earnings are this quarter. I'm in for the long haul.

  • Report this Comment On January 18, 2012, at 7:08 PM, bigskyrad wrote:

    Another enormously profitable quarter for AAPL, besides everything else, brings that happy day a little closer when Apple will declare a dividend. It will happen some day, perhaps when they have to use scientific notation to report the amount of cash on hand.

  • Report this Comment On January 18, 2012, at 9:32 PM, skateforward wrote:

    I'm in it for the long haul as well. Just passing an Apple store makes my day!

  • Report this Comment On January 19, 2012, at 12:15 AM, gilsh wrote:

    There is a difference between what is said in this article to what people are saying in the talkbacks.

    1) It is probable to assume that the analysts/Apple game of who guesses higher is going to be nicer for Apple this reports season.

    2) This being said, Apple's long term prospects have not looked this grimmer, for quite some time now, in my mind:

    As I wrote in my blog, Apple is no longer smart-phone vendor no. 1:

    http://websightstory.blogspot.com/2011/10/apple-is-no-longer...

    and its insistence on playing legal games is actually helping competitors:

    http://zutot.blogspot.com/2011/04/apple-finds-samsungs-table...

    (check the bottom of that post for relatively recent updates regarding Apple's legal losses).

    Please don't misunderstand me: I'm not saying that Apple is currently overvalued. Considering sales and Earnings, it is probably undervalued.

    But there can be no doubt that Apple's moat has been broken last year in the smart phone market, a market in which it has had a clear lead for several years now. This is bound to make a difference on profitability in the coming years.

    And the same is happening in the tablets arena:

    http://websightstory.blogspot.com/2011/11/kindle-fire-is-shi...

    Considering that 2012 will bring with it an attempted repenetration of Microsoft & Nokia and Rimm's very-late-in-the-game play;

    Considering Apple's clear difficulties in penetrating China and the developing world;

    Considering that fact that the digital TV is a very different ball game and Apple no longer has a genius to guide it in these new and turbulent waters;

    Necessarily makes a careful investor doubtful.

  • Report this Comment On January 20, 2012, at 1:31 PM, AnneBonney wrote:

    At least XOM pays a nice little dividend. XOM is a forever stock AAPL is only a growth play.....until it's not. Think I'll keep both for now.....

  • Report this Comment On January 21, 2012, at 11:31 AM, redbonesrock wrote:

    Why all the buzz about Apple....they are in an increasingly competitive business and their fearless leader is gone! And even with all those profits they still don't pay a dividend to their investors. No thanks. I'll put my money into a play that pays and what until the inevitalble happens and then I will be shorting the stock as it slides into normalcy.

  • Report this Comment On January 23, 2012, at 10:46 AM, afamiii wrote:

    The commoditisation of the smartphone market like the PC market before it was inevitable. Apple as the number 2 maker by volume, number 1 by value and the innovation leader will continue to command a premium over android makers.

    The smartphone/tablet markets have several more years of 25% annual growth. SmartPhone penetration remains around 10% globally and 35% in the US. And tablets are even further behind.

    This article is good insight for short to medium term investors.

    Disclosure: I own AAPL and GOOG shares.

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