The original amateur Apple analyst regularly clobbered the pros.
I’ve lost track of how many times Daniel Tello has taken first place in my quarterly Apple Earnings Smackdown—a friendly competition, now in its ninth year, that pits the estimates of amateur Apple analysts against Wall Street’s finest.
I do know that Tello—a Venezuelan engineer by training and Apple watcher by avocation, who posts under Tolkienesque pseudonym Deagol—regularly clobbered the pros, especially circa 2008-2013, when the effects of iPhone subscription accounting were still being felt. Tello understood early on—well before the Street—that Apple was accumulating billions in deferred revenue that had to eventually hit the bottom line.
Tello was also part of a loose confederation of amateur analysts who noticed that the IMEI (International Mobile Equipment Identity) numbers of the early iPhones were generated in sequence. By pooling iPhone numbers and dates of purchase they were able to estimate—with pretty good accuracy—how fast Apple was churning out the product. When Apple caught on and began randomizing its IMEI numbers, Tello switched to web order numbers, which he used to track iPad sales. Apple eventually randomized those too.
Today it’s harder to beat the pros. Apple’s growth is steadier and more predictable, and the company no longer low-balls the guidance it gives Wall Street—as it did under Steve Jobs—in order to blow past expectations.
But Tello is still in the game, even if he’s not always in the top 10. His explanation:
On how I do it, it’s hard to put in words. Huge spreadsheet with tons of formulas and charts, in the end it’s just a fancy way of connecting the dots and applying liberal doses of intuition tempered by years of experience doing this.
Here, for the record, are Tello’s final estimates for fiscal Q1 2017:
Revenue: $78.05 billion
iPhone (units): 77.5 million
iPad (units): 14.5 million
Mac (units): 5.25 million
Watch (units): 6 million
Services: $6.794 billion
Other products: $4.554 billion
Gross margin: 38.7%
We’ll find out how well he and his compatriots did after the markets close on Jan. 31.
Below: Two charts from Deagol’s AAPL Model, neither of which I fully understand.
Click to enlarge. Not seeing? Try website.