updated 10:05 am EDT, Wed October 22, 2008
Analysts on Apple Q4
Apple is beginning to experience harsher conditions than it is used to, say analysts in the wake of yesterday's Q4 results call. Researchers from Needham & Co. comment that Apple's guidance for the next quarter is "downbeat," as a result of worries about a looming recession. UBS' Maynard Um is still more pessimistic, downgrading Apple's rating from "Buy" to "Neutral" based on the economy, which Um suggests will hurt Mac sales. The company's average selling price of the iPhone, $635, is further said to be "unsustainable" in a competitive environment with longer replacement cycles. Um's price target has slid from $125 to $115.
Needham, UBS and Piper Jaffray all agree on disappointment with Mac shipments for the quarter, which amounted to just over 2.6 million, as opposed to the 2.8 million expected in many quarters. It had been thought that Apple's giveaway of iPod touches and nanos during its Back-to-School promotion would fuel higher Mac numbers.
iPod shipments of about 11 million are said to either be in line with expectations, or below them; Piper observes that iPods or no longer a key growth driver for Apple, and shipments may be expected to shrink in year-over-year terms by 16 percent in the next quarter.
The analysts are not universally pessimistic however, due in great part to Apple's shipment of nearly 6.9 million iPhones, which Um contrasts with UBS' predictions of 4.2 million. In this regard, Apple's non-GAAP results -- which include the Apple TV and the iPhone -- are said to be surprisingly high, producing $2.69 EPS off $11.7 billion in revenue, compared to UBS forecasts of $1.37 and $9.5 billion.
Both Needham and Piper have taken optimistic views on Apple's long-term prospects. The latter says that the iPhone, new iPods and the new MacBooks (including a $999 model) should allow it to fare well in a bad economy. Needham says it is keeping with its "buy" rating, as well as an extremely high price target of $240. The only substantial downside is said to be the FY09 GAAP EPS estimate, which is being reduced from $5.95 to $5.65.