Apple's holiday quarter hinges on Macs
updated 12:45 pm EST, Mon January 14, 2008
Apple's holiday quarter
Apple is due to report its December quarter results after the market closes on January 22nd, and research firm Piper Jaffray expects an upside to Wall Street expectations based primarily on Mac sales. Piper Jaffray senior analyst Gene Munster says Mac sales could reach 2.3 million -- beating out average estimates of 2.2 million -- with iPod sales of 24-26 million over Wall Street predictions of 24.7 million. Munster also says Apple may well report 2.2 million iPhone sales, just shy of average investor expectations of 2.26 million.
"Despite concerns regarding the channel, we believe Apple will announce December Mac units of around 2.3 million," Munster wrote in a research note obtained by MacNN. "NPD data for the first two months of the quarter suggests 60 percent year-over-year growth in Mac sales (vs. the Street at 41 percent year-over-year). If Apple sells 2.3 million units, it would be a significant positive; 2.3 million Macs represents 43 percent growth year-over-year compared to 28 percent year-over-year in December-06 and 20 percent in December-05."
Typically strong iPod sales during the holidays, coupled with news from a Taiwanese supplier which confirmed that it did not miss its quarterly guidance as a result of a canceled Apple order and NPD data for the first two months of the quarter, lead Munster to expect as many as 25-26 million iPod shipments ahead of Street consensus at 24.7 million.
As for the iPhone, Munster expects sales essentially in line with Wall Street expectations.
"The iPhone is still in startup mode, so '08 is more of a foundational year for the product than it is a growth year. We believe it is more important that the iPhone product line progresses in '08 (with feature improvements and price decreases) than it is for the iPhone to see significant unit growth," the analyst said. "We anticipate more substantial unit growth in '09."
Assuming Apple achieves Munster's estimates at a 33 percent gross margin, which he says is possible due to the Leopard launch in October and a favorable commodity pricing environment, the company would see earnings-per-share of $1.59 on $9.4 billion and guidance of $1.42 on $9.2 billion.
"While it is difficult to predict what the stock will do around the quarter, we believe the December results, coupled with new Macs announced at Macworld, will increase Street confidence that Apple will have sustained Mac market share gains in 08."
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I must admit, these projections make me just a bit nervous. While all anecdotal evidence (foot traffic in Apple stores) points to an extremely good quarter, and Apple's guidance was extremely bullish (and we know they always under-promise and over-deliver), raising these numbers even further may produce some disappointments tomorrow, and especially next week, during the earnings call.
Apple's stock value has been tracking the NASDAQ woes recently and many have pinned their hopes on these two weeks to pull it out of the overall doom-and-gloom of the stock market. Even minor hint of an under-achievement might send it right back down to the rest of the bottom-dwellers.