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ML: long-term Mac estimates up, short term down

post #1 of 8
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The recent release of Apple Computer's Boot Camp software sent the company's stock soaring over 15 percent in just four days, exciting investors about the prospect that Apple could snatch considerable marketshare from rival PC makers now that its Intel-based Macs can run Microsoft's operating systems.

Merill Lynch, however, believes that many overreacted to the announcement, which was widely publicized last week.

Research analyst Richard Farmer warned clients on Thursday that consumers who show superficial interest may "bail at the cash register" when it comes time to pay for Apple's hardware, coupled with the $200-300 for a Windows license and the requirement to reboot the machine when switching between platforms.

Still, Farmer said that Apple's Boot Camp should increase sales of Macs in the long term, despite slower-than-expected Mac sales in the March quarter. "That said, we do expect some incremental Mac buyers and are raising our fiscal year 2007 estimate of Mac revenue share of the global PC market by 0.25 percent from 3.45 percent to 3.7 percent," the analyst wrote. However, he cut his Mac unit sales estimates for the past March quarter to 1.1 million (from 1.3 million) due to the slow ramp in MacBook Book Pro production.

Farmer also lowered his estimation for iPod sales from $10.1 million to $8.8 million for the March quarter, and dropped his 2006 iPod estimate from 53 million to 47 million. The analyst noted, however, that iPod gross margins could rise when Apple reports results next week due to falling flash memory costs over the last few months.

The new estimates reflect a nine percent sequential drop in quarterly Mac sales from the strong holiday quarter and modest increase of six percent increase in Mac unit sales year-over-year, Merrill Lynch said. On the other hand, higher priced Mac desktops and laptops have caused the firm to increased its estimates for average Mac selling price to $1,370, up about 11 percent from the year-ago quarter.

In his latest research note, Farmer also said he believes his March quarter revenue estimates of $4.338 billion are now below consensus, but still represent 34 percent year-over-year growth. Meanwhile, the firm's earnings-per-share (EPS) estimates of 45 cents are still a penny above consensus Wall Street estimates.

Merrill Lynch maintains a "neutral" rating on shares of Apple Computer.
post #2 of 8
Quote:
Originally posted by AppleInsider

Farmer also lowered his estimation for iPod sales from $10.1 million to $8.8 million for the March quarter

I think that should be units (iPods) not dollars.
post #3 of 8
Quote:
Originally posted by AppleInsider
The recent release of Apple Computer's Boot Camp software sent the company's stock soaring over 15 percent in just four days, exciting investors about the prospect that Apple could snatch considerable marketshare from rival PC makers now that its Intel-based Macs can run Microsoft's operating systems.

Merill Lynch, however, believes that many overreacted to the announcement, which was widely publicized last week.



An analyst I actually agree with!

Had Boot Camp been introduced with the first Intel Macs or with Leopard it would have done nothing to the stocks. Boot Camp filled the void the missing birthday present had created. The marked wanted something and it reacted like an over eager teenager.
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post #4 of 8
Yeah but all stocks do that.

When people get exicted they go up.

When people get bored or see something negative they go down.

If ML didn't want people to react to market news then the stock market wouldn't be neccessary.
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post #5 of 8
I find it a bit odd that people are playing up the cost of a Windows license as much as they are. Surely people a large percentage of people buying MacBooks because they can dual boot will be replacing an existing systems that have valid XP licenses that can be transfered.
post #6 of 8
Quote:
Originally posted by ChevalierMalFet
I find it a bit odd that people are playing up the cost of a Windows license as much as they are. Surely people a large percentage of people buying MacBooks because they can dual boot will be replacing an existing systems that have valid XP licenses that can be transfered.

Depending on the type, an OEM licence might not transfer. Very often they don't have a regular XP installer anyway but rather a special installer designed just for the computer model it was included with. Even some computer sellers don't even include a reinstall CD of any sort, you have to pay them money to get that.

If you can buy a piece of hardware at a computer shop or online ship, you might be able to buy a discount XP CD and licence kit for a little over $100.
post #7 of 8
Quote:
Originally posted by JeffDM
Depending on the type, an OEM licence might not transfer. Very often they don't have a regular XP installer anyway but rather a special installer designed just for the computer model it was included with. Even some computer sellers don't even include a reinstall CD of any sort, you have to pay them money to get that.

If you can buy a piece of hardware at a computer shop or online ship, you might be able to buy a discount XP CD and licence kit for a little over $100.

Not to mention BitTorrent.
post #8 of 8
Right, you won't catch analysts basing market predictions on the ability of customers to score a copy of bittorrent, however.
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