apple-stockWe’ve chided Piper Jaffray’s well-known resident Apple analyst Gene Munster for his repeated predictions of a standalone Apple television set being just around the corner. However, this time we’re giving Munster credit for trying to deflate the hype balloon which has taken Apple stock and consumers for a ride fueled by unreal expectations. The analyst is just the latest Wall Street figure hoping to inject reality into a belief that the Cupertino, Calif. iPhone maker was immune to the vagaries of mortal businesses – such as down periods.

In a note to his clients, Munster walked a fine line, laying out some uncomfortable numbers for a company that hasn’t reported negative figures in a decade. Along the way, he also tested the waters of delayed gratification during a time investors appear more like strung-out addicts accustom to quarter after quarter of mind-blowing revenue from Apple…

According to Munster (via Fortune’s Philip Elmer-DeWitt), Apple will report second-quarter revenue of $41.3 billion – below the Street’s $42.8 billion and on the low end of the firm’s own $41-$43 billion guidance.

Yesterday, Philip Elmer-DeWitt reported Wall Street was forecasting lower quarterly income, yet record revenue.

Munster also forecasts Apple will announce lower-than-expected iPhone sales (35.5 million versus 37 million) and Mac demand of 3.8 million compared to more than 4 million projected by the Street.

We explained how observers are worried about lower gross margins for Apple. While Wall Street consensus is for around 40 percent, Munster is preparing his clients for 38 percent. Apple’s guidance – which is usually discounted as too cautious – is for between 37.5 percent and 38.5 percent.

iPhone 5S (Martin uit Utrecht 001)
Rumor mills see the iPhone 5S in a bunch of colors some time this summer

Why do we care about gross margins, a number which unlike revenue or sales is hard to wrap your mind around? A company’s gross margin is a great way to forecast how well a firm can convert sales into profit.

For a long period, Apple’s gross margin has been the envy of competitors and one reason the smartphone maker can be outsold numerically by Android but still bank billions of dollars.

iTV under Christmas tree
A mythical iTV remains an area of intense focus for Gene Munster

In terms of new products – which is believed to have dented Apple’s margins during the second period – Munster doesn’t foresee anything major happening until June. We may see some products upgraded in April, but the announcement won’t be enough to affect the company’s stock. Again, the analyst tries to throw cold water or any thoughts of a quick turn-around.

iWatch graphic
An Apple smartwatch, another rumored gadget analysts are calling for.

Although we might seen new hardware in June, he predicts Apple’s June quarter will result in lower-than-expected revenue: $36 to $38 billion versus a Thomson Finance consensus of $40.2 billion.

Budget iPhone (Martin Hajek 001)
A rumored less-pricey iPhone with a polycarbonate body, a no brainer for some.

So, when can investors jump back on the Apple bandwagon?

Wait until the second half of this year for the company to spring back, Munster advises.

“We believe the risk reward to owning shares of AAPL is favorable given the back half of the year will likely have several product announcements that should reaccelerate earnings growth from a negative 14 percent in the first half of 2013 to a positive 15 percent in the back half,” the analyst predicts.

He said the March quarterly report and the June guidance “will likely mark the turning point” for Apple, retaining the analyst’s Overweight rating and $767 share price target.

  • King

    Apple need to stop getting lazy and redesign most of it’s products and iOS most of their stuff has looked the same for the past 3-7 years

    • 7 years? the iPhone has been around since ’07… some math might help.

    • as long as they are making big profit they will not want to spend money on innovation… sad

      • I disagree…lol…wait until iOS 7…lol

  • i love the multiple color iPhone rumor.. how many times has it popped up now… almost every year since the 3G. Why to people keep believing the same shit year after year if it hasn’t happened yet?

    • more colors will appeal to females and kids…

      • King

        Kids really got $700 for an iPhone?

      • Kids dont need an iPhone at ages 9-16 i mean seriously? I’m 17 and i find it absolutely ridiculous. they’d rather stare at a phone then talk to people… and yea okay but it’s a rumor, it’s always a rumor, and i think people should stop believing the same rumor year after year unless or until it happens.

      • King

        That’s what the iTouch is made for mostly kids who don’t talk or can’t afford the monthly rates

  • Milo

    Is the 5S gonna be even longer but not wider? LOL

    • there rumors so dont believe what you here until it’s proven…

      • Chliii

        Here? Some spelling might help. Lol

      • Guest

        spelling nazi let me fix that for you

      • okay..? reading might help

      • Chliii

        You just busted on the other guy for spelling, it was only fair

      • um no i didn’t. read it again

      • Chliii

        Math nazi, sorry, that’s better

      • i wasn’t correcting his spelling. he said iOS has been around for 7 years, is said it’s been around for 5.5….?

      • Chliii

        Master of the obvious, way to go!!!

    • no its going to be identical as “S”models always are…lol

  • I love how when it comes to articles about stocks and analysts, you guys really push the big words and try to make it seem more intellectual than any other article on here. Yet when it comes to the jailbreak tweaks you really just use the simplest words and dumb it down.

    • IDB is odd…lol but still the best iphone info

  • ic0dex

    I’m sick and tired of the iPhone already and if the iPhone 5S is going to be the same crap in a different bucket then good by Apple and Hello! Samsung Galaxy S 4. Look the iPhone 5 is a beautiful phone looks great and I love it but the iOS is just freakin boring same crap over and over nothing new to explorer. Yes my iPhone is Jailbroken and to tell you the truth I’m sick of Jailbreaking as well. There is so much crap on Cydia all of the tweaks are old and haven’t been updated. I personally think that we will no longer see a Jailbreak for the iPhone 5S or the iPhone 6. So if Apple does not do a major update to the iOS by the time the iPhone 6 comes out I’m out of here.

    • Samsung? should try Moto’s new phone coming out soon that is supposed to blow the S4 out of the water. Yea the S4 has an Octacore (IN THE US IT’S ONLY QUAD) but even when the S3 launched it lagged often on the home screen even with a quad. Motorola phone’s are incredibly durable, feel like a quality product (more so then Samsung’s plastic) and when running an AOSP ROM are liquid fast. if you don’t believe me try it yourself. My old Droid x2 is on a custom built AOSP ROM and runs better all around then my Sister’s S3 (Except for gaming).

      • “My old Droid x2 is on a custom built AOSP ROM” yup and android folks always talking bout iPhone is only good when JBed.. lol sounds like yall need JBs

      • iPhone is still good without a jailbreak…lol…it’s just better with a jailbreak…lol

      • No, there aren’t even any mods or anything. i put stock software from Google on my phone the way Google meant to have it, not some slow sluggish version moto wants to look good. and ironically, the iPhone 4 (Dx2’s competitor) benches lower then my dual-core tegra 2…. without any software changes. That specific year’s iPhone is still not up to par with my Droid. And when are you guys going to realize Apple keeps screwing you? A perfect example is when they released the first and second iPhone. they had the technology to release a fast 3G version of the phone the first time but they didn’t. And when the 3G came out, the HTC Evo 4G was already blowing it out of the water…. maybe Apple should start releasing phones that can compete with the raw power of most new android phones, like the Razr Maxx HD, the Droid DNA, and the S3 and soon to be S4… I have had both, and have love for both (Android & iOS) but if Apple doesn’t change something they will be fazed out like they always are.

    • lol sounds life a whole life crisis there android is same boring android also.. iPhone is just more smooth and stable even if boring…. tech gets boring… the smart phone industry is over saturated and stagnated right now.. the companies have settled into a predictable money making mode which sees little tech improvements at all… You ave to wait for the industry to crash or apple to fall to see any real advancements at all..

      • Lars

        Funny thinking. In a span of 6 years Apple created the iPhone and iPad which are among the best selling products in the history. The iPhone blew the competition of the water and the iPad took every competitor by surprise and left them bewildered!

        Yet 6 years later people think Apple isn’t innovating just because they haven’t come up with a great new product. Great inventions are few and far between and it’s sad that people are so narrowminded and f***** spoiled.

      • New innovations are great, until that that same company makes those devices slower with every update, trying to force you to buy new devices. And not one thing has changed on iOS that Apple themselves created. Apple the past 3 major updates has just taken ideas from it’s competitors made it look nice, and took away most of their features. borrowing ideas isn’t innovation.

      • Lol

      • android has changed it’s looks at the very least a few times since it’s release. it’s always had far more features and custom-ability then iOS, and Any new “features” that Apple has implemented have been borrowed from guess who? Google. only Apple makes it look just as clean, and dumbs it down by withholding features. Ignorance is bliss for some, i guess. Even Google had an accurate voice search before Apple decided it would hop on the band wagon.

  • apple is facing over saturation in all its markets now and the only thing that will help them expand is to lower prices to increase accessibility by poorer folks… thats it..most iPhone owners already have 2 or 3 iPhones bought and the updates are seldom big enough to convince everyone to turn around and upgrade their phone every time apple wants them too..

  • Shivam

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