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Research analysts comment on Leopard delay

updated 10:45 am EDT, Fri April 13, 2007

Analysts on Leopard delay

Several research analysts have offered their thoughts on Apple's decision to delay its Mac OS X Leopard launch from the spring to the fall in order to ship its forthcoming iPhone on time. Analyst Ben Reitzes of research firm UBS lowered his fiscal year 2007 earnings estimates but increased his expectations for fiscal year 2008 to account for Leopard sales shifting ahead several months. "For fiscal year 2007 our earnings-per-share estimate is $3.20 (was $3.26), with revenue growth of 24 percent to $23.9 billion (was $24.1 billion)," Reitzes said. "For fiscal year 2008, we increase our earnings-per-share estimate to $3.90 (was $3.85) with revenue growth of 33 percent to $31.7 billion (was $31.6 billion)." UBS, like other industry experts, views the news as a net positive because the iPhone could contribute more to Apple's bottom line. "We would view any weakness on the news as a buying opportunity," the analyst added. The research firm maintained its $124 price target with a 'Buy 2' rating on Apple shares.

Similarly, American Technology Research senior analyst Shaw Wu sees the Leopard delay as a near-term setback, and says his firm has already accounted for slower Mac sales. Wu, however, believes that Apple's iPhone is not the sole reason for the company's delay of Leopard.

"While Apple cited a shift in resources to iPhone and more time for developers to beta test as reasons for the delay, our analysis indicates that if not for the 'secret' features, the core Leopard operating system would likely have shipped on time," the analyst said. "We believe the extra time Apple is allocating is for developers to test secret features that will likely be revealed at its WWDC 2007 conference starting on June 11, 2007."

Wu said he believes consensus sell-side estimates are still unsurprisingly aggressive and need to reset closer to his own, noting that he views the delay in Leopard and reset in sell-side estimates as short-term issues.

"We would take advantage of weakness to add to positions as we see upside potential to $118 based on 27x our calendar year 2008 earnings-per-share plus $13 in net cash. We believe Apple remains among the strongest fundamental stories with its vertically integrated end-to-end portfolio."

The analyst sees a worst case downside risk of $80-85 for Apple shares. American Technology Research maintained its 'Buy' rating with a price target of $118.

Piper Jaffray backs other analysts

Senior analyst Gene Munster of research firm Piper Jaffray today reinforced beliefs by both UBS and American Technology Research that Apple's delay of Leopard is only a temporary setback, and that the decision will only push income from Leopard sales back several months. Munster, like Wu, is not convinced that the delay is entirely related to the iPhone.

"The delay will shift an estimated $0.08 earnings-per-share or 2.6 percent (of calendar year 2007) from the June 2007 and September 2007 quarters into the December 2007 and March 2008 quarters ($0.04 from/to each quarter)," said Munster. "Apple reaffirmed the on-time arrival of the iPhone in June as part of the announcement, which we see as a positive that outweighs the delay of Leopard."

The analyst described Apple's track record for getting hardware out on time as hit or miss, but said his confidence in the iPhone shipping in June has risen from 70 percent to 90 percent. Munster also noted that while Apple is suggesting a late June launch of its iPhone, the company might deliver the device earlier at its Worldwide Developers Conference (WWDC), which begins on June 11th.

"While we are not convinced the delay of Leopard is entirely related to getting the iPhone out on time, we view the shipment of the iPhone as critical, and the timing of Leopard as a non-event."

Piper Jaffray maintains its 'outperform' rating on Apple shares with a price target of $124.




by MacNN Staff

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Comments

  1. ggirton

    Joined: Dec 1969

    0

    Built In Backup

    Leopard has built-in backup and restore. I'm completely comfortable waiting another six months for that to run through regression testing in all circumstances.

    Think about it.

  1. eldarkus

    Joined: Dec 1969

    0

    Other site

    Another site states that it may have something to do with A "parallel's" feature with Boot Camp and Vista. Being able to boot Vista inside OS X...

    While i'm saddened by the news, let them do what they have to do to get yet another good product out the door! :)

  1. testudo

    Joined: Dec 1969

    0

    Re: built in backup

    Wow! Built-in backup! But Apple better not wait too long. Soon someone else out there might come out with a backup solution as well! What? You mean there's already 6000 different types of backup apps? And they cost substantially less then Leopard's $150? Oh, never mind.

  1. Clive

    Joined: Dec 1969

    0

    Analyse this

    So, what the analysts were saying just yesterday is today proven to be wrong. Don't they take a look at the risk factors involved, or do they get a cheat card in their breakfast cereal every morning?

  1. TheBum

    Joined: Dec 1969

    0

    not your typical backup

    To offer a counterpoint to testudo, the thing that puts Leopard's built-in backup far ahead of other backup solutions is the framework that allows it to be integrated into any app, which allows the backed-up data to be viewed and restored within the context of the application via Time Machine. With other solutions, you pretty much have to know the location in the filesystem where each affected file resides.

    That said, I also would prefer that Apple get all the kinks worked out of Time Machine before Leopard ships due to the potential of hosing everything up if Time Machine is buggy. I'll gladly wait if that's what it takes.

  1. danviento

    Joined: Dec 1969

    0

    But don't forrget,

    The backup integration has to function with Leopard's "Time Machine" capability. I think even my version of Retrospect would had directory issues keeping that straight.

    One of those secret features I'm hoping for: windows app integration. Forget running windows alongside or apart from Mac OS, a method to make those apps appear to run natively, even if using a background emulator, would make my day. Parallels is nice, and VPC works for the not-so-heavy stuff, but a built-in method that has little to no drain on the system would be a dream come true. Not to mention it would blur the line between the need of a PC or Mac.

  1. Feathers

    Joined: Dec 1969

    0

    incredulous?

    I'm glad that a few of the analysts expressed some incredulity towards the Leopard delay having anything to do with the iPhone. I can't believe that Apple is so under-resourced that this could actually be an issue. Just exactly how many employees did they have to divert? 600? 1000? Come on, this piece of BS is decidedly M$.

  1. ronjamin

    Joined: Dec 1969

    0

    Bla Bla Bla

    Instead of pushing the iPhone out the door, they should have stayed on schedule. Really doesn't seem like a Steve move, more like Pre-Steve.

  1. hayesk

    Joined: Dec 1969

    0

    Windows integration?

    Why are so many people hot on Windows integration - you can get that today with Parallels. Why does MacOS X need it built-in.

    This is not the reason for the delay. Apple wants you to run Mac applications, not Windows applications. To those that want Windows integration, why? Get Parallels today. Do you really want it to look like a Mac app? Wouldn't you rather have an app that *acts* like a Mac app, rather than one that simply looks at one - that's a step backwards in good UI.

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