updated 01:20 pm EDT, Fri May 20, 2011
Memo issued prior to Chengdu disaster
Production limitations that were hurting iPad shipments last quarter have "significantly improved," with "better yields and higher output due to successful retooling and conversion of more production lines to iPad 2," claims Sterne Agee analyst Shaw Wu. "From our understanding, it still has a ways to hit the 2H goal of 3-4 million units per month but getting closer," he writes in a new memo. The note was created prior to news of an explosion at an iPad 2 plant.
The disaster could play havoc with Wu's iPad estimates for the quarter, which have been raised from 5.9 million units to 6.8 million. iPhone estimates have been adjusted upward from 16 million to 17 million, and Macs shipments are now expected to come in at 3.9 million instead of 3.83. A gross margin forecast has been pushed from 38.3 to 39 percent, in contrast with Apple guidance of 38.
Regarding the iPhone, Wu suggests that demand is "better than we expected" as a result of white models, international markets and "continued strong adoption" at Verizon. "Channel feedback" suggests that Macs are being aided by the launch of Sandy Bridge-based iMacs, which Wu argues could help desktop Mac sales rebound. Apple's bestselling computers have long been its MacBooks.
Revenue and EPS predictions have been increased from $23.4 billion and $5.38 to $24.7 billion and $5.75. FY2011 numbers are likewise up to $103.6 billion and $25, from $101.1 billion and $24.50. Looking ahead to FY2012, the analyst has raised figures from $119.5 billion and $28 to $125.4 billion and $29. A new price target for Apple stock has been set at $460, up from $445.