Apple May Have a Good Summer After All

Investors have been coming to terms with the notion that Apple (NASDAQ: AAPL  ) may have a slow summer. It's not a busy shopping time seasonally, and everyone is expecting new product launches this fall.

Apple's own guidance is also relatively muted, with revenue for the June quarter expected in the range of $33.5 billion to $35.5 billion. At the low end, that would actually be negative sales growth of 4% from the $35 billion in revenue posted last time around.

Is Apple actually in store for a better summer than investors are expecting?

Morgan Stanley analyst Katy Huberty believes this may be the case. The analyst is now modeling iPhone sell-through of 31 million units, up from a prior estimate of 26 million iPhones being sold to end users. She believes the Street is perched at a 27 million consensus, so Apple could be tracking toward better-than-expected iPhone units this quarter. Huberty believes that Apple's efforts to make iPhones more affordable through price cuts and installments plans are yielding very tangible results.

There are a few things to note regarding Huberty's estimates.

First, Apple reports based on sell-in, which is the headline figure that investors tend to focus on. For instance, she estimates that Apple's iPhone sell-through was 36.4 million last quarter, lower than the 37.4 million iPhones that Apple reported. In contrast, market researcher Gartner estimated iPhone sell-through at 38.3 million last quarter -- higher than the reported number.

Also, the methodology behind her estimate strikes me as peculiar. Huberty is using colleague Ajit Agrawal's approach, which analyzes multi-country search data from Google Trends and cross-references historical patterns with reported seasonal sales data. The link between Web searches and sales seems questionable to me, particularly because any possible correlation may not be consistent. I buy iPhones all the time and never go to Google to search for "iPhone" before purchasing -- I just go to Apple.com.

Hopefully her model still has some legs to it and proves me wrong, and Apple may have a good summer, after all.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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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 May 22, 2013, at 11:18 PM, rob2777 wrote:

    Your Mac love is showing

  • Report this Comment On May 22, 2013, at 11:45 PM, Stevendad wrote:

    Apple hate is mystifying to me. I keep hearing it will trade down in 200's soon. This is equal to its 2015 to 2016 CASH. This values it's brand, patents, employees, good will, stores & iTunes at zero. ??? People have not recognized that this has turned from a growth to a value play. I'd suggest starting a lower cost product company ( I like Mango as a name ) to build and sell overseas in the developing world. This would avoid punitive US repatriation taxes and cannibalizing US and European markets. If only our countrys was run 1/10th as well Apple.

  • Report this Comment On May 23, 2013, at 12:10 PM, Mathman6577 wrote:

    Good point Stevendad.

    I have written several articles on analyst bias against Apple and for Amazon, Samsung, Google, etc. For example, when the iphone5 was released 5 million units shipped in 3 days was "disappointing" while an estimate of 10 million S4's shipped in 4 weeks was "fantastic" according to one website.

    And regarding the numbers games no analysts have been accurate (in either direction) regarding Apple throughout the years.

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