The Braeburn Group

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The Braeburn Group March Quarter Estimate Index

Members of the Braeburn Group of independent Apple analysts were polled for estimates of Apple's March quarter (FQ2 2014) performance. The consensus of the index participants is revenue of $43.566 billion, representing an expected decline in reported revenue of about $36 million year-over-year. The consensus revenue estimate is within management's revenue guidance for the quarter of between $42 billion and $44 billion.

The consensus earnings per share estimate of $10.59 represents an expected year-over-year rise in eps of 4.95%. The consensus net income estimate of $9.312 billion is below the company's net income performance of $9.547 billion in the March quarter one-year ago. The expected rise in earnings per share is due to the ongoing $60 billion share repurchase program.

The gross margin consensus estimate for the March quarter is 38.14%. In the year-ago quarter, Apple reported gross margin of 37.50%. Management's gross margin guidance for the quarter is 37% to 38%. Several of the index participants expect gross margin to be at or above the upper threshold of management's guidance.

The consensus Mac unit sales estimate of 3.966 million units suggests a 0.35% rise in the number of Macs sold in the quarter. In the prior-year quarter, Mac unit sales fell about 2% to 3.952 million units.

The consensus iPad unit sales estimate from the index participants is 19.032 million. This represents an expected year-over-year decline in unit sales of 2.29%. In the March quarter one-year ago, iPad unit sales rose 65.09% due in part to constrained supplies of iPads entering the 91-day period and the initial introduction of the iPad mini.

During the recent December quarter conference call with analysts, management stated iPad channel supplies were within the target range at the start of the March quarter. On a sequential basis, index participants expect iPad unit sales to have declined almost 27%.

The consensus iPhone unit sales estimate of 39.160 million suggests year-over-year unit sales growth of 4.62%. The addition of China Mobile and NTT DoCoMo as authorized iPhone carrier is expected to have benefited unit sales. However, China Unicom and China Telecom began sales of the newest iPhone handsets at launch versus commencement of sales of the original iPhone 5 in the March quarter last year. This will have dampened the unit sales growth rate in the March quarter. On a sequential basis, the consensus iPhone unit sales estimate suggests a unit sales decline of about 23.30%.

We will provide forward-looking narrative on our expectations for Apple's near-term performance with our next update to the Braeburn Group AAPL 12-Month Price Target Index scheduled for publication in early May.

Individual revenue estimates range from a high of $44.749 billion to a low of $41.330 billion. Individual eps estimates range from a high of $11.05 to a low of $10.30.

The Group's consensus estimates are detailed in the table below:

Averages
Units
%
Metric
Macs
3,965,750
0.35%
YOY Growth
iPhones
39,159,500
4.62%
YOY Growth
iPads
19,031,875
-2.29%
YOY Growth
Averages
Dollars
%
Metric
Revenue
$43,566,873,750
-0.083%
YOY Growth
EPS
$10.59
4.95%
YOY Growth

 



March Quarter Index updated 04/11/2014. For more information about the Braeburn Group Index, please contact robert@braeburngroup.com