Sept. quarter preview

Apple will likely reveal earnings slightly higher than Wall Street expectations when it discloses its financial results on October 22nd, according to research firm Piper Jaffray, and Apple's AT&T revenue share will probably take the spotlight. "Despite highly anticipated sales figures from Apple's September quarter, we believe investors may focus on the AT&T revenue sharing agreement," Piper Jaffray senior analyst Gene Munster wrote in a research report obtained by MacNN. "After the first full quarter of iPhone sales, Apple will announce the total AT&T revenue share from the June and September quarters." Munster believes those revenues could bring Apple as much as $10.6 million, excluding an estimated 10 percent of iPhones which were unlocked to operate on a non-AT&T carrier.

The firm is expecting a slight upside to Street consensus with earnings-per-share of $0.84, vs. guidance of $0.65, on $6 billion in revenue. Piper Jaffray maintains its 'Outperform' rating on Apple shares with a $211 price target.

Munster says that while unlikely, Apple could report a gross margin of up to 33 percent with as many as 2.2 million Mac sales, 11 million iPod shipments, and 1.05 million iPhone sales. The analyst points to Apple's historically conservative outlook on its future earnings, predicting that the Cupertino-based company will at best guide investors toward earnings of $1.36 on $8.6 billion.

"We believe 33 percent gross margin is achievable, due to favorable component pricing and the release of new products (with lower margins) late in the quarter," Munster said. "But given the strong sales we observed during over 60 hours in Apple stores throughout the quarter, we now believe Apple may sell as many as 2.2 million Macs, 11 million iPods and 1.05 million iPhones."

Mac sales booming

Apple's introduction of a new iMac on August 7th -- taking advantage of two months in the company's strongest educational buying quarter -- combined with "robust" demand for its MacBook laptops could result in as many as 2.1-2.2 million Mac sales, beating Wall Street estimates of 2 million Macs this quarter.

"We note that Street sentiment is aggressive, considering a 2.2 million Mac number would represent the largest quarter-over-quarter Mac growth in company history," Munster explained. "Specifically, 2.2 million Macs represents a sequential uptick of 436,000 units, or 25 percent."

That many Mac sales would prove larger than the previous high quarter-over-quarter change in a Mac quarter one year ago, which saw sequential growth of 283,000 -- or 21 percent. On a year-over-year basis, 2.2 million Macs would signal 40% growth over last year's strong September quarter.

"We make note of these high growth numbers to highlight the fact that Mac expectations are high heading into the earnings report, but we are confident that Apple will deliver with Mac units between 2.1m and 2.2m."

iPhone remains strong

The analyst also observed strong demand for Apple's iPhone after a $200 price cut in early September -- nearly two months after the device hit store shelves in late July -- that angered many early adopters of the cellular device. Apple responded to the cries of its first-in-line purchasers shortly after the price cut by offering them a $100 in-store credit.

"We continue to believe Apple sold 1.05m iPhones in the September quarter due largely to the spike in demand following the price cut," Munster noted.

Refresh kindles iPod sales

Apple's introduction of two new iPod models -- the iPod touch and third-generation iPod nano -- suggests a potential increase in sales of around 6.1 percent sequentially, according to the analyst, based on previous September quarters that also contained new iPod introductions.

"Due to the magnitude of these product launches, and compelling new features, we believe quarterly sales could end near the high end of that range. However, keep in mind that the Sept. quarter only benefits from two full weeks of new iPods, but we believe the Dec. quarter has the potential to show meaningful upside to Street iPod numbers."

by MacNN Staff