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Fourth quarter Apple estimates raised at AmTech

post #1 of 22
Thread Starter 
Despite a number of concerns on the part of investors, analysts for American Technology Research say Apple Inc. is again poised to post bold numbers for its forth fiscal quarter ending later this month.

In a research note released to clients Monday, analyst Shaw Wu cited sources who say the company is experiencing "broad strength" across all of its business segments as consumers continue to buy up into higher-priced Mac and iPod offerings.

"As a result, we are raising our forecast to $5.96 billion in revenue and $0.83 in earnings-per-share (from $5.8 billion and $0.73) versus guidance of $5.7 billion and $0.65 and consensus of $5.94 billion and $0.81," he wrote. "We are modeling a gross margin of 32.5 percent (from 30.8 percent) versus guidance of 29.5 percent."

While Wu had anticipated strength from the new "fat boy" nanos during the quarter, he said he was surprised to learn that the higher-priced iPod classics and iPod touches are also selling quite well. Similarly, he said, overall demand for Apple's Mac line is stronger than anticipated with an unexpected mix shift towards high-priced models.

Given his checks, the analyst raised his iPod units sales estimate for the quarter ending September 29th to 11 million units from 10.4 million units, and his Mac unit forecast to 2 million units from 1.95 million units.

"Contrary to fears with potential cannibalization from new iPods and backlash from an iPhone price cut, iPhone sales have regained momentum," he added. "For the September quarter, we are now forecasting 900,000 units (from 770,000 and guidance of 730,000)."

Wu also tweaked his fiscal 2008 forecast, which he notes is now ahead of consensus estimates. The analyst is now modeling Apple to generate $30 billion in sales and per-share earnings of $4.55 (from $29.5 billion and $4.25) versus consensus of $29.5 billion and $4.41.

"While we are concerned with potential softness in US consumer spending, it appears that Apple is once again positioned to buck the trend with its compelling product line and strong international exposure (52 percent of revenue)," he wrote. "We recommend buying Apple on pull-backs and see upside to [our $185 target] in 6-12 months."
post #2 of 22
A definite megatrend!
post #3 of 22
They have already sold more than 1 million iPhones which means the number of iPhones sold will be significantly higher than 900'000. My estimate is 1.5 million. The iPod and Mac sales estimates are in line with my own expectations.
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post #4 of 22
Quote:
Originally Posted by green-bee.salsa View Post

They have already sold more than 1 million iPhones which means the number of iPhones sold will be significantly higher than 900'000. My estimate is 1.5 million. The iPod and Mac sales estimates are in line with my own expectations.

The 1MM units is including last quarter... I think you are a bit overly optimistic with 1.5MM for the quarter. 900k Units would be just fine by me, although I can dream that they will hit 1MM.

The only way they could possibly hit 1.5MM for the quarter is if they start selling iPhones in the UK, Germany, France, and Spain tomorrow, and even that would be a big stretch.
post #5 of 22
Mmm... That Wu-tastic analysisis has restored my sense of childlike wonder, and just in time for Halloween and Christmas!! w000t
post #6 of 22
Exactly what are the concerns that bother long-term Apple investors. The thing that bothers me the most are short-term Apple investors. And maybe bloggers, too. Every little thing about every Apple product is gone over with a fine tooth comb. Crooked nano screens, slow Coverflow, Touch screen black range, poor iTunes synching. The list goes on and on. Most companies put out a product and three-quarter decent is good enough, but Apple products NEED to be perfect. Short term investors don't like hearing about those sort of problems. It scares them silly.

I don't see any serious problems with Apple's products to cause worry. A decent line of iPods. A brisk-selling iPhone in the U.S. and soon Europe. IMacs are selling well. Plenty of Apple stores opening and doing brisk sales. Leopard's imminent release. Apple is cash heavy. Apple TV isn't doing that well right now, but maybe the iTunes movie rental will boost sales.

Still no large names are really pushing Apple stock, so it appears to be stuck at $130-140 range for a little longer. Mild target price boosts don't do anything much for Apple stock. Only ultra-brisk iPhone sales in Europe and tens of millions of iPods being sold during the holidays will move the stock price up to the $150-155 range.

What's funny is that if RIM announced that a BlackBerry model with a different color was being introduced, look for it's stock to jump a couple of dollars. Now that's weird. RIM has confident investors, Apple doesn't.

My expectations mean nothing. Even if Apple products outsell mostly everything they compete against, it has to be by a huge margin. Otherwise it just isn't good enough to please analysts or investors. Even a slight letdown is considered a flop. With target prices spread from $160 to $210 there's such a huge gap of expectations I don't know what to expect.
post #7 of 22
Haha Great username. Glad to know DS9 lives on in our hearts.
post #8 of 22
Quote:
Originally Posted by Constable Odo View Post

Exactly what are the concerns that bother long-term Apple investors. The thing that bothers me the most are short-term Apple investors. And maybe bloggers, too. Every little thing about every Apple product is gone over with a fine tooth comb. Crooked nano screens, slow Coverflow, Touch screen black range, poor iTunes synching. The list goes on and on. Most companies put out a product and three-quarter decent is good enough, but Apple products NEED to be perfect. Short term investors don't like hearing about those sort of problems. It scares them silly.

I don't see any serious problems with Apple's products to cause worry. A decent line of iPods. A brisk-selling iPhone in the U.S. and soon Europe. IMacs are selling well. Plenty of Apple stores opening and doing brisk sales. Leopard's imminent release. Apple is cash heavy. Apple TV isn't doing that well right now, but maybe the iTunes movie rental will boost sales.

Still no large names are really pushing Apple stock, so it appears to be stuck at $130-140 range for a little longer. Mild target price boosts don't do anything much for Apple stock. Only ultra-brisk iPhone sales in Europe and tens of millions of iPods being sold during the holidays will move the stock price up to the $150-155 range.

What's funny is that if RIM announced that a BlackBerry model with a different color was being introduced, look for it's stock to jump a couple of dollars. Now that's weird. RIM has confident investors, Apple doesn't.

My expectations mean nothing. Even if Apple products outsell mostly everything they compete against, it has to be by a huge margin. Otherwise it just isn't good enough to please analysts or investors. Even a slight letdown is considered a flop. With target prices spread from $160 to $210 there's such a huge gap of expectations I don't know what to expect.

You've basically nailed what the stock market is about. My sense of childlike wonder about the world continues to dwindle whenever I learn more about the stock market.
post #9 of 22
Quote:
Originally Posted by Constable Odo View Post

With target prices spread from $160 to $210 there's such a huge gap of expectations I don't know what to expect.

I think your prognosis is rather gloomy.
Most of those who use any negative news, however small, to knock Apple, are usually the short-term speculators who are trying to make a quick buck, and, due to the almost paranoic nervousness of the market, they often succeed.
But please look at the overall trend of AAPL so far this century!

I firmly believe that when the December-quarter results come out in January, AAPL will be fast approaching or above the $200 mark.
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post #10 of 22
Some editing services provided for free (from a non-native English speaker, so please bear with me; I may not have caught it all). Stuff in blue is meant to be 'struck through.'

C'mon, AI.........

Quote:
Originally Posted by AppleInsider View Post

Despite a number of concerns on the part of investors, analysts for American Technology Research say Apple Inc. is again poised to post bold numbers for its fourth fiscal quarter ending later this month.

In a research note released to clients Monday, analyst Shaw Wu cited sources who say the company is experiencing "broad strength" across all of its business segments as consumers continue to buy up into higher-priced Mac and iPod offerings.

"As a result, we are raising our forecast to $5.96 billion in revenue and $0.83 in earnings-per-share (from $5.8 billion and $0.73) versus guidance of $5.7 billion and $0.65 and consensus of $5.94 billion and $0.81," he wrote. "We are modeling a gross margin of 32.5 percent (from 30.8 percent) versus guidance of 29.5 percent."

While Wu had anticipated strength from the new "fat boy" nanos during the quarter, he said he was surprised to learn that the higher-priced iPod classics and iPod touches are also selling quite well. Similarly, he said, overall demand for Apple's Mac line is stronger than anticipated with an unexpected mix shift in product mix towards high-priced models.

Given his checks Based on data derived from his field research, the analyst raised his iPod units sales estimate for the quarter ending September 29th to 11 million units from 10.4 million units, and his Mac unit forecast to 2 million units from 1.95 million units.

"Contrary to fears with [sic] potential cannibalization from new iPods and backlash from an [sic]iPhone price cut, iPhone sales have regained momentum," he added. "For the September quarter, we are now forecasting 900,000 units (from 770,000 and guidance of 730,000)."

Wu also tweaked adjusted his fiscal 2008 forecast, which, he notes, is now ahead of consensus estimates. The analyst is now modeling forecasting thatApple to willgenerate sales of $30 billion in sales and per-share earnings of $4.55 (from $29.5 billion and $4.25) versus consensus estimates of $29.5 billion and $4.41.

"While we are concerned with potential softness in US consumer spending, it appears that Apple is once again positioned to buck the trend with its compelling product line and strong international exposure (52 percent of revenue)," he wrote. "We recommend buying Apple on pull-backs and see upside to [our $185 target] in 6-12 months."
post #11 of 22
You say my prognosis is gloomy. I'm not the one saying that people should only buy on pullbacks. Even at this level, Apple is a buy. And I would buy, but right now I'm tapped out. I assure you, I am not a short-term investor.

Today it was announced that there is a definite date for a 3G iPhone with GPS capabilities. First quarter of next year. Broadcomm and Triquint will be supplying chips. I'm not sending doom and gloom to drive down prices. I'm merely pointing out what I've seen over several months time. But as you see, nobody seems to be buying in on this news and that's a pretty big story.

I've no reason to scare anyone off and I see no reason for anyone to be selling Apple shares. I don't know how more positive I can be. I fail to see a reason for Apple's stock to be pogoing up and down at this point since analysts keep raising their estimates. There should be a steady incline up to the end of this year in my estimation. But we'll see if that's what takes place.

You're mentioning $200 by the end of the year. Maybe if everything is perfect, but it seems far-fetched to me from watching Apple's stock movement since June or so. I mean, 60 or so points in a few months is highly unlikely by looking at recent trends. I know the holiday season is nearly upon us so that's an incentive. Sure I hope so, but jeez, I'm just trying to be sensible.
post #12 of 22
Quote:
Originally Posted by nvidia2008 View Post

Mmm... That Wu-tastic analysisis has restored my sense of childlike wonder, and just in time for Halloween and Christmas!! w000t

Hey! You're back on track. You're over 1,000.
post #13 of 22
Quote:
Originally Posted by green-bee.salsa View Post

They have already sold more than 1 million iPhones which means the number of iPhones sold will be significantly higher than 900'000. My estimate is 1.5 million. The iPod and Mac sales estimates are in line with my own expectations.

Well, the first two days June 29th and June 30th, are not in the fourth quarter. They sold 270K on those two days and they are not included in the 900K number above. If you add the two, the actual total sold so far is in the 1,170,000 range according to this analyst.

You may be right. The new price will definitely help sales. Not to mention a whole crop of better iPods for Christmas.

And I hear that Macs are selling well. I'm thinking of taking my $100 credit and buying another Mac. The analyst that said that the iPhone $100 credit would cost Apple $100 Million ought to have his head examined. It will be MUCH lower than that. Somewhere in the $25M to $30M range.

Go AAPL!
post #14 of 22
Quote:
Originally Posted by nvidia2008 View Post

You've basically nailed what the stock market is about. My sense of childlike wonder about the world continues to dwindle whenever I learn more about the stock market.

Actually, it's not difficult to understand why long term investors are concerned.

despite Apple's great track record over the past few years, one from which I've benefited immensely, there is the concern that it can't continue forever.

At some point, it it thought, Apple will make a big mistake, and tumble.

Whenever Apple has a spat with one of its partners, that fear surfaces, because, despite of many feelings that Apple has the upper hand, and will prevail, they might not.

If Apple builds up too much distrust within the companies that it must do business with, things could get tough.

Look at Sony. For decades, it was THE brand to beat. But that ended years ago. With industries moving faster these days, if Apple isn't careful, it will happen to them sooner, rather than later.

That's the fear.
post #15 of 22
ajhill,aaarrrgggh: You are right, I totally forgot about the 270'000 from the June quarter. It will be around 1.2 million iPhones then, still 300'000 more than Shaw Wu predicts.
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post #16 of 22
Quote:
Originally Posted by melgross View Post

Actually, it's not difficult to understand why long term investors are concerned.

despite Apple's great track record over the past few years, one from which I've benefited immensely, there is the concern that it can't continue forever.

At some point, it it thought, Apple will make a big mistake, and tumble.

Whenever Apple has a spat with one of its partners, that fear surfaces, because, despite of many feelings that Apple has the upper hand, and will prevail, they might not.

If Apple builds up too much distrust within the companies that it must do business with, things could get tough.

Look at Sony. For decades, it was THE brand to beat. But that ended years ago. With industries moving faster these days, if Apple isn't careful, it will happen to them sooner, rather than later.

That's the fear.

Great points.

I'd add to that, fears/concerns about bench-strength.

What is the succession plan?
post #17 of 22
Quote:
Originally Posted by anantksundaram View Post

Great points.

I'd add to that, fears/concerns about bench-strength.

What is the succession plan?

What succession plan?
post #18 of 22
Quote:
Originally Posted by melgross View Post

What succession plan?

CEO succession plan.... you know, should.... well, er......

Every company has to plan for the eventuality. In AAPL's case, it is even more pertinent.
post #19 of 22
Quote:
Originally Posted by anantksundaram View Post

CEO succession plan.... you know, should.... well, er......

Every company has to plan for the eventuality. In AAPL's case, it is even more pertinent.

That was a joke, as I hope you had noticed.

Jobs is only 51, I believe. Even thought he recently had surgery for that serious illness, he appears to be fine.

I doubt very much that while he was recovering, any major decisions were made without him.

Several hi profile people within Apple, who, for the past several years, were named as possible successors to Jobs, have left.

I can't think of anyone now inside Apple who could succeed Jobs, whilst having the same degree of authority that he has now.

I really don't see any succession plans.
post #20 of 22
Quote:
Originally Posted by melgross View Post

That was a joke, as I hope you had noticed.

No. But I am known to miss subtleties.

Quote:
Originally Posted by melgross View Post

Jobs is only 51, I believe. Even thought he recently had surgery for that serious illness, he appears to be fine.

Long may he live, innovate, distort the field, and prosper.

Quote:
Originally Posted by melgross View Post

Several hi profile people within Apple, who, for the past several years, were named as possible successors to Jobs, have left.

I can't think of anyone now inside Apple who could succeed Jobs, whilst having the same degree of authority that he has now.

I really don't see any succession plans.

Yes, that's what I am worried about. I think is a bit of a built-in "put" on Apple's stock price.
post #21 of 22
In other words, if Steve Jobs catches a cold, sneezes or coughs, look out for a steep drop in stock price. So I guess in this case, Steve is Apple and there is no foreseeable replacement. May he live long and prosper so I can prosper and live long.
post #22 of 22
Quote:
Originally Posted by Constable Odo View Post

In other words, if Steve Jobs catches a cold, sneezes or coughs, look out for a steep drop in stock price. So I guess in this case, Steve is Apple and there is no foreseeable replacement. May he live long and prosper so I can prosper and live long.

Right now, that's true. Whether it will be true several years from now, well, we can only guess.
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