Apple Q1 earnings: Analyzing the analysts

On Tuesday, Bullish Cross' Andy Zaky, representing a group of  unaffiliated analysts who track Apple (aapl) in blogs, challenged the professionals who do it for banks and brokerage houses -- and whom the bloggers believe are largely clueless (see Apple Q1 2009 earnings smackdown).

So now that Apple has reported its 2009 Q1 earnings, how did the two teams do?

The results are summarized in the chart below. The red numbers are the worst two estimates; the green numbers the best two.

What's immediately apparent is the sharp difference in sentiment. The bloggers tend to be bullish, the Street -- at least on Apple -- tends to bearishness. And on the number that matters most to investors -- earnings per share -- the bloggers were right on the money, missing the actual EPS by only a few pennies. The Street, by contrast, underestimated Apple's earnings by 40 cents a share -- a stunning 22.5%.

But the best individual performance goes to a professional, RBC Capital's Mike Abramsky, who had three greens and no reds, correctly calling (or at least getting in the ball park of) unit sales numbers for iPhones, iPods and Macs -- although he did miss revenues by $367 million and, bizarrely, has the lowest price target for Apple in the business: $70 a share.

On the other hand, the two worst performances were also turned in by professionals: Bernstein Research's Toni Sacconaghi, who scored no greens and missed Apple's revenue number by $874 million, and Morgan Stanley's Kathryn Huberty, who underestimated unit sales in every category and missed the iPod number by 6.27 million units. (If anybody has her estimates for revenue and EPS, we'd love to fill in those blanks.) (UPDATE: Huberty's Q1 estimates: EPS $1.34; revenue $9.569 billion. Thanks Turley!)

For everybody else, it was mixed bag. Zaky scored two greens and two reds, overestimating iPhone sales by 2.75 million units (a mistake he attributes to the fact that Apple drew down iPhone inventory heavily in the quarter).

Piper Jaffray's Gene Munster, the bulls' favorite analyst, came closest on Apple's revenue number but missed its EPS by 45 cents. We've asked him how that can happen and will update if we get an answer.

Special mention goes to Scott Craig of Merrill Lynch, who scored highest in Apple's tricky non-GAAP numbers, the adjusted earnings that factor out deferred revenue on iPhone sales (see Spotlight on Apple's hidden revenue stream). Making sense of Apple's subscription accounting is so tricky that most analysts don't bother to do it. As you can see in the chart below, Craig did it better than anyone:

Overall, we'd have to call this one a draw. The bloggers called the EPS correctly, but the best individual performances were turned in by pros. Zaky, for his part, thinks we should give this round to them.

For our live blog of the earnings call, click here. For a transcript, click here. Apple's press release, which includes its balance sheet, is here. And if you have an hour to spare, you can download a podcast of the earnings call — including COO Tim Cook's "we believe" speech — from the iTunes Store, where it will be available for two weeks. Just search the store for Apple Quarterly Earnings Call.

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