updated 01:25 pm EDT, Mon July 18, 2005
Q3 iPod, halo-effect
Apple "extended its string of upside revenue and earnings surprises" in the third quarter, Needham & Company said today in a report for investors. The iPod's continuing popularity was a driving factor behind the better-than-expected earnings. " The two key drivers of the Apple story continued to work—the iPod and halo effect." iPod shipments rose to 6.16 million units, up 616% year-over-year. The iPod "continued to lure Windows users into the Macintosh fold." Mac unit shipments rose 35%, three times the PC market growth rate. "We’re raising our 2005 and 2006 earnings estimates, maintaining our buy rating and price target of $52."
"The iPod continued to fuel Apple’s momentum in the third quarter which was reported last Wednesday (July 13th). Despite numerous observations that sales were soft, iPod shipments rose to 6.16 million units in the third quarter from 5.31 million in the second and 860,000 a year ago. The iPod’s sales momentum should continue as Apple increases the number of outlets carrying the product and HP rolls out the product through its distribution network."
"The third quarter also demonstrated that the halo effect is alive and well. Mac shipments increased 35% year-over-year. Although this percentage was down from a 42% increase in the second quarter, the decline was chiefly due to strong sequential quarterly growth in Mac shipments a year ago. Total revenues of $3.52 billion were up 75% year-over-year."
"We have moderated the growth in 2006 Mac shipments for one reason. Apple will begin its transition to Intel processors beginning in the spring of 2006. It’s possible, if not likely, that many customers will postpone their purchases of Macs in anticipation of this event, which could extend into 2007. We expect the iBook and PowerBook will be the first Mac models to ship with Intel processors because Apple’s notebook lineup has been confined to G4 processors far too long as it is. The Mac Mini could also be an early candidate for an upgrade."