Here's the thing: Apple (Nasdaq: AAPL ) CEO Tim Cook knows there are people like me out there: analysts who are on the lookout for and absorb any iData the company offers up and will subsequently analyze at that data from any and all angles.
That's exactly why at the iPhone 5 unveiling last month, just about every statistic Cook shared came with the careful disclaimer of being "through June," meaning it was all public knowledge that could be derived from its earnings releases through July. Yet, despite this awareness, Cook still decided to drop a major earnings clue, even as Apple's heading into its fiscal fourth quarter report on Thursday after the close.
Perhaps he inadvertently let it slip. Perhaps he couldn't help but brag. Perhaps he was just being generous. Either way, let's see what it means.
That's a lot of iPads
During the presentation, Cook said that two weeks ago, Apple had sold its 100 millionth iPad. By my count, Apple had only sold a cumulative total of 84.1 million iPads through the fiscal third quarter. That means that between the end of June and up until a couple weeks ago, Apple had sold at least 15.9 million iPads.
Source: SEC filings.
That's a major clue as to what investors can expect heading into earnings. Keep in mind that Apple's fiscal year actually closed about three and a half weeks ago, so there's still a little room for speculation, especially since I doubt Cook meant exactly two weeks ago.
Apple sold 17 million iPads last quarter, which translates into about 1.3 million units per week. Taking a week's worth of units off that implied figure suggests iPad unit sales of roughly 14.6 million last quarter. That's well below the median estimate of 18 million iPad units that analysts (institutional and independent) are hoping for. However, Braeburn Group, included in the independents, has a bad habit of dramatically overshooting since institutional analysts lowballed Apple for so long.
A tale of two ASPs
The iPad fetches an average selling price, or ASP, of about $600, and if we give Apple a benefit of the doubt and go with 15 million units, that still translates into $9 billion in revenue. We already know that the company sold 5 million iPhone 5 units. If that device brings in a model-specific ASP of $700, which would be higher than overall iPhone ASP, then that would be another $3.5 billion in revenue in the bag.
That combined total of $12.5 billion is about a third of the $36 billion that the market is looking for, but that would only be for one product family and one specific iPhone model.
Another miss in store?
In characteristic Amazon.com (Nasdaq: AMZN ) fashion, it simply won't give investors Kindle Fire unit sales figures. However, the company did say that its new $199 Kindle Fire HD is the best-selling product on its site after launching a month ago.
Google's (Nasdaq: GOOG ) recent earnings release implied that the search giant had only sold 1 million Nexus 7 units after its July launch, based on its increase of "other income" to $666 million. A million units is better than most (non-Kindle Fire) Android tablets, but far from earning Google any gold stars on its report card.
If iPad unit sales come in at "just" 16 million, it's reasonable to assume that the Kindle Fire HD and Nexus 7 are eating into Apple's market -- all the more reason why the iPad mini is necessary.
Of course, all we know is that Apple has sold at least 100 million iPads by now, which is certainly a feat worth bragging about considering it's a device that was launched just two and a half years ago. Apple could still have a blowout in store. However, Cook makes it sound as if the threshold was crossed after the fiscal quarter closed, in which case Apple would definitively fall short of the 18 million units that investors are expecting Apple to move.
Apple investors should begin bracing themselves for a possible iPad miss.
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