Apple Watch - By my estimates, worth $1.318 Billion in Revenue

Been trying to work out the effect the Apple Watch is having on Apple Revenue. Always difficult to judge when the data isn't listed in the Divisional summary of the earnings report. Still, you can always try some regression analysis to figure out what is going on.


Firstly, you need to seasonally adjust the Quarterly revenue statements of the "Other Product" categories in the Apple financial reports.


To find the seasonal signal, I have found the 4 period moving average for the quarterly revenues since 2012. I have then averaged the residuals (of the difference between the raw figure and the moving average) to come up with the Seasonal factors for each quarter. I have then removed this factor from the raw figures to come up with a Seasonally adjusted data set. Results below.

	Raw	Average	Residual	Average Residual	SA Series
2015.2	1689	2010.25	-321.25	-299.6666667	1988.666667
2015.1	2689	2058	631	836.5833333	1852.416667
2014.4	1896	2094.75	-198.75	-483.6666667	2379.666667
2014.3	1767	2093.75	-326.75	-532.5833333	2299.583333
2014.2	1880	2130	-250	-299.6666667	2179.666667
2014.1	2836	2245.25	590.75	836.5833333	1999.416667
2013.4	1892	2529.25	-637.25	-483.6666667	2375.666667
2013.3	1912	2575	-663	-532.5833333	2444.583333
2013.2	2341	2668.75	-327.75	-299.6666667	2640.666667
2013.1	3972	2684	1288	836.5833333	3135.416667
2012.4	2075	2690	-615	-483.6666667	2558.666667
2012.3	2287	2895	-608	-532.5833333	2819.583333
2012.2	2402	3199	-797	-299.6666667	2701.666667
2012.1	3996	3996	0	836.5833333	3159.416667

I then calculated the trend of this Seasonally adjusted data set (works out to be -81.551*Number of time periods + 3078.4)



Extending this trend into the Q3 2015, brings as a Seasonally adjusted value for "Other Product" revenue of $1.855 billion.


Adding back the average residual for Q3 (-532 million) to this figure, leads us to an estimated raw trended figure of  $1.322 Billion.


So this figure represents what Apple Should have earned in Q3 2015 from "Other Products" if the trend over the last 3 years continued.


But Sales from this division actually produced $2.641 billion. We make the assumption that the difference was revenue from sales of the Apple Watch.


That means Apple Watch produced $1.318 billion in sales over the last quarter. Not bad, but not the $1.8 billion the investors expected.


Hence the Apple shares are down.