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Can Apple Get to $60 Billion in Revenue? Here's How.

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Apple announces it December quarter results after the market closes on Wednesday, January 23.  The company’s revenue guidance was $52 billion, which would be an increase of 12% from last years $46.3 billion.

The Street's average revenue estimate is $54.7 billion, an increase of 18% year over year and my base case is $57 billion in revenue, an increase of 23%.  The growth rates are apples to oranges since the December 2011 quarter had 14 weeks and the December 2012 quarter was 13 weeks.  To adjust for the difference you need to add 7% to the year over year growth rates.

For the December 2011 quarter Apple had given revenue guidance of $37 billion and beat it by $9.3 billion or 25%.  If Apple could get to $60 billion it would beat guidance by $8 billion or 15%.  Below are three scenarios on how Apple could generate $60 billion in revenue based upon higher than expected iPhone or iPad sales since those are the two product lines with the highest upside and variability.

To generate an additional $3 billion above my base case here are three possible scenarios:

  • Sell 4.7 million iPhones more than the 50.5 million I am projecting for a total of 55.2 million iPhones
  • Sell 6.3 million iPads more than the 23.75 million I have am projecting for a total of 30.1 million
  • Sell 2.3 million (52.8 million) more iPhone and 3.2 million iPads (26.9 million)
  • Every one million iPhones generates about $645 million in revenue
  • Every one million iPads generates about $475 million in revenue

I believe it is unlikely that Apple sold over 55 million iPhones even with it being launched in more countries then the 4S but it could come close to 53 million.  The average Street iPhone estimate is 47 million.

iPads are more likely to have beaten estimates due to demand for the iPad Mini.  While Apple probably didn’t sell 30 million iPads due to supply constraints it may be possible that enough additional iPhones and iPads were sold to hit $60 billion.  The average Street iPad estimate is 23 million.

Below is a table that provided details of my base case and three scenarios vs. the December 2011 quarter.

Upside Upside
Base case All iPhones 50/50 All iPads
$ bil $57 $60 $60 $60
Dec. 2011 Dec. 2012 Dec. 2012 Dec. 2012 Dec. 2012
iPhones $24.4 $32.6 $35.6 $34.1 $32.6
Units 50.50 55.2 52.8 50.50
ASP $645
iPads $9.2 $11.3 $11.3 $12.8 $14.3
Units 23.75 23.75 26.9 30.1
ASP $475
Macs $6.6 $7.0 $7.0 $7.0 $7.0
Units 5.25
iPods $2.5 $1.7 $1.7 $1.7 $1.7
Units 11.2
Other $3.6 $4.5 $4.5 $4.5 $4.5
Total $46.3 $57.0 $60.0 $60.0 $60.0
Guidance $37.0 $52.0 $52.0 $52.0 $52.0
Delta $9.3 $5.0 $8.0 $8.0 $8.0

ASP: Average Selling Price

Disclosure: My family and I own Apple shares