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UBS analyst offers in-depth insight into Apple, revenue potential

post #1 of 8
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In a research note released to clients on Monday, a bullish USB analyst, Ben Reitzes, said his firm believes Apples momentum will continue even into its seasonally slow second quarter.

The analyst said that Apple is seeing a "very solid" reception to all models of the Mac mini and iPod shuffle, as well as strong sales of its new PowerBook G4 line.

According to the firms checks, Apple retail stores hold waiting lists for Mac minis that are, in many cases, at least a page long. Shipments of the new mini Mac have been selling out 'within days' of the stores receiving the product, the report says, while shuffle shipments -- in the hundreds and thousands -- are selling out within hours.

While both of these new Apple products are being met by shortages, Reitzes cites sources who indicate that these supply issues should be resolved by next month, in time for the end of Apples fiscal second quarter.

"We have noticed many customers opting to purchase iPod Minis when discovering stores are sold out of Shuffles," Reitzes wrote. He also expects the company to debut a revised iPod mini with a 5 or 6GB capacity in the 'new future.'

And while Dell and HP may be seeing consumer weakness of late, Reitzes says it does not appear that Apple is feeling any of this pressure. According to his sources, traffic at Apple's retail stores has now escalated to 'extraordinary' levels of up to 1 million visitors per week.

The firm said that Apple has put itself back on the map with the iPod, which has generated a multiplier effect that can now be leveraged by sales of the company's software products, such as the new iLife, iWork, and upcoming release of Mac OS X 10.4 "Tiger."

"We believe the next big 'multiplier' business to get attention will be Apples software, which posted revenue of $213 million in 1Q05 and estimated to approach $1 billion in total revenues this fiscal year."

With increasing Mac sales and an already large install base of users, the firm believes the revenue opportunity for software could be significant. "In fact, one could argue that with its new stores, an enhanced online store and broadened distribution this could be Apples year to see its software sales surge," Reitzes wrote. He claims that Apple needs only about 25% of its existing OS X users to upgrade to Tiger over the next few quarters to drive upside to its software segment.

Touching on the revenue possibilities of Windows converts, Reitzes said Apple only needs to convert a small portion of its Windows iPods users to Macs to enable its shares to work from there. With Apples share of the PC market currently at about 2%, he estimates that each gained point of market share will represents about $2 billion in incremental revenue, or well over $0.30 per share.

Given Apple's momentum, UBS raised its estimates on Apple for the tenth time since January 2004. The firm raised its fiscal second quarter estimate to $0.45 earnings per share from $0.41 based on revenue growth of 67% year-over-year to $3.19 billion. Factoring in higher sales of Macs, iPods, and peripherals, the firm also raised its fiscal year 05 estimates to $2.15 from $1.95.

The firm said it also believes that the margins on Apples peripherals and software are under appreciated, which could make its latest estimates appear conservative. "We also believe that Apple can benefit from enhanced distribution of iPods and Mac Minis, beginning with the potential for Wal-Mart to begin selling iPods this spring," the firm said.
post #2 of 8
Ha, I think this thing is FAR bigger..
What if 1 out 10 ipod users switches???
My son bought a G5 after using an ipod (actually, dad bought one for him) and now the whole family uses ipod -except for dog- and notebook and imac.
I guess mr. Reitzes will have to sit down and do his numbers a few times more before the year is over...

This Apple-family is growing BIG.

("Hey, dad, are you actually an Apple sales-rep in disguise?" "No son, now eat your veggies...")
post #3 of 8
"a bullish USB analyst"

...i was going to post something witty but i'll just point out the typo...
post #4 of 8
I think a lot of people are beginning to see. My dad'll be buying a 17" PB soon, after much persuasion from myself. And my friend uses my 12" PB when he's round to check his email, after a complete crash from his aging PC, he's already stated that if he had the cash he would get a Mac (Mac mini, my friend??) And neither of them are iPod users. Hell, I wasn't an iPod user when I ordered my (first Mac) PB last September, but soon after decided to go all the way.

You only have to use iTunes, to see how fast it searches your library compared with ever other Windows audio player out to see the quality of Apple software. I would say switching is more to do with iTunes than the iPod. (Although I know people have iTunes because they have an iPod.)
Daniel Tull
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Daniel Tull
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post #5 of 8
Quote:
Originally posted by danielctull
I think a lot of people are beginning to see. My dad'll be buying a 17" PB soon, after much persuasion from myself. And my friend uses my 12" PB when he's round to check his email, after a complete crash from his aging PC, he's already stated that if he had the cash he would get a Mac (Mac mini, my friend??) And neither of them are iPod users. Hell, I wasn't an iPod user when I ordered my (first Mac) PB last September, but soon after decided to go all the way.

You only have to use iTunes, to see how fast it searches your library compared with ever other Windows audio player out to see the quality of Apple software. I would say switching is more to do with iTunes than the iPod. (Although I know people have iTunes because they have an iPod.)

interesting point. now eat your veggies!!!
post #6 of 8
Quote:
Originally posted by sunilraman
interesting point. now eat your veggies!!!

I'm your son??




Well... okay then... \ *eats veggies*
Daniel Tull
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Daniel Tull
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post #7 of 8
Quote:
Originally posted by AppleInsider

"We have noticed many customers opting to purchase iPod Minis when discovering stores are sold out of Shuffles," Reitzes wrote.

Heh. Which is exactly what happened to my wife, when she went to buy me a Valentine's present....



Martin.
15" PB, 15" MBP, MB, MBA, G5 iMac, C2D iMac, Mac Mini, UK iPhone 3G, SGI RealityEngine2, SGI/Division Virtual Reality Rig, NetApp F760C
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15" PB, 15" MBP, MB, MBA, G5 iMac, C2D iMac, Mac Mini, UK iPhone 3G, SGI RealityEngine2, SGI/Division Virtual Reality Rig, NetApp F760C
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post #8 of 8
Quote:
Originally posted by danielctull
I'm your son??

Well... okay then... \ *eats veggies*

Good boy... *Sorry, feelin bored... will go start a new thread in general discussion, involves you UK fellas to some degree*
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