updated 09:45 am EST, Thu January 12, 2006
ML ups estimates
Merill Lynch has raised its guidance for AAPL, following similar (today). However, Merill maintained a 'neutral' rating on the stock, saying that the Intel transition brings both opportunities and risks. Raising the firm's estimates for iPod sales, analyst Richard Farmer said that the majority of the increased guidance is driven by Apple's higher-than-expected iPod sales, which were ahead of Merill's expectations for the hoiliday quarter.
At his keynote, Jobs announced sales of 14 million and revenues of $5.7 billion in the December quarter, significantly higher than Farmer's estimates of 11-12 million iPod sales and revenues of $4.7 billion. The company now estimates sales that Apple will sell 52 million iPods in its fiscal 2006 year (up from 37 million) and 65 million in 2007 (up from 41 million).
Farmer said that Apple's announcement of Intel-based iMac and PowerBooks puts the company ahead of schedule--about "58-62% of the way through the Intel transition from a hardware perspective." However, he said that 38-42% of the Mac platform has yet to switch, which "could cause customer hesitation this year until the entire line is transitioned."
In his research note, Farmer noted that "Apple did not make any earth shattering announcements," which he says could leave the door open for new markets and new products, such as the iPhone and TiVo-like Mac mini, later this year. Merill raised its 2006 fiscal year revenue and EPS estimates to $22.4 billion and $2.48 (from $17.3 billion and $1.82) and 2007 estimates to $26.6 billion and $2.97 (from $20.0 billion and $2.12).