In a research note to clients on Thursday, analyst Keith Bachman estimated the Cupertino, Calif.-based Mac maker would see notebook unit growth of 20 percent in fiscal 2008, but more modest gains for desktops and iPod digital music players.
"We projected only modest growth in iPod, 12 percent unit growth since we believe that market saturation issues will continue to work against Apple combined with Apple's weight to the US market," the analyst wrote. "We believe that CPU growth will be the key driver for Apple's revenues and we project 20 percent notebook unit growth and 3 percent desktop growth."
Bachman expects that one of the key drivers for Apple will come in an improved version of its Boot Camp software, which will make it easier for users to run Windows in parallel under its upcoming Leopard operating system. The analyst believes such a move would make it more compelling for users to switch from Windows to to the Mac and improved global penetration.
"Apple sales are primarily US, Western Europe and Japan, while most of the unit growth is outside of these markets," he wrote.
In easing into his predictions for the 2008 fiscal year, Bachman said initiated his Apple-branded cell phone model with expectations that the company could sell 3.9 million handsets in fiscal 2007 and 6.7 million in FY08. His analysis assume that Apple could captured a 5 - 8 percent share of two wireless carriers in in fiscal 2007 and expand on that relationship to an additional two carriers in fiscal 2008.
"Since we have yet to see the product, our forecast on handsets has the most volatility, both up and down," Bachman told clients. "Our concern is that Street expectations are well ahead of Apples ability to deliver against these expectations." He sees the first handsets from Apple retailing for about $350 a piece, with a gradual decline to $300 by fiscal 2008. He expects Apple to pocket a quarter of the phones' retail cost as its gross margin.
Meanwhile, the analyst's first pass at 2008 Apple estimates also includes a new item dubbed "Other Media" which he expects will generate $140 million in 2007 and $240 million in 2008 from sales of products like iTV and potentially an Apple branded TV.
Overall, Bachman estimates Apple will generate sales of $26.9 billion and per-share earnings of $3.25 in fiscal 2008.