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Report: Apple ups Mac orders by 20 percent, scales back on iPods

post #1 of 34
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Following a series of checks with sources in the Far East, researchers for Banc of America have put out a call indicating that Apple has commissioned a significant increase in production of Macs for the current quarter while simultaneously reducing iPod production.

"We continue to believe that desktops and notebooks are the key driver of the Apple story," analyst Scott Craig wrote in a report to clients Friday. "Both desktop and notebook production numbers have moved up by 20%+ from expectations in early January, indicating potentially solid demand thus far in the March quarter, as well as some inventory replenishment."

He added that his checks suggest Mac production numbers will continue to rise throughout the quarter, and that MacBook Air production has also increased slightly since mid-January.

At the same time, however, the analyst noted that iPod production numbers for the March quarter "appear to have been significantly reduced, down 10–20% from early January and down 30%+ from early December."

The magnitude of those cuts, coupled with only modest iPod unit growth reported in the December quarter, indicate that Apple's digital media player business may struggle to show meaningful unit growth during the 2008 calendar year.

"Current production expectations for March imply a 5–10% year-over-year unit decline, versus our expectation for 5% year-over-year unit sales growth during the March quarter, likely implying a continuing inventory rightsizing and sales sluggishness," he wrote.

As a result, Craig reduced his iPod unit assumptions for the quarter while raising average selling price (ASP) assumptions to account for robust sales of the higher-priced iPod touch models. That said, the analyst advised clients that he believes Apple cannot risk maintaining its current ASPs for much longer and will inevitably be forced to cut iPod pricing across the board.

Meanwhile, the Banc of America analysts also used his not to add corroboration to on-again off-again reports of severe iPhone cuts, which reportedly took place in both December and March. Those cuts, however, have since reportedly "bounced" back.

"[Still], we remain concerned that iPhone production and demand are lackluster," he explained. "After several data-points in December and early January indicated large production cuts of 50%+ to iPhone production for the March quarter, our recent checks reveal that production levels are 40–55% higher for [the first calendar quarter of 2008], than the recent cuts originally suggested, although still down significantly from two months ago."

Therefore, Craig said, the introduction of a 3G handset in the second half of the year and further price reductions on the first generation iPhone are critical to achieving the company’s 10 million unit expectation for calendar year 2008.

In general, the analyst summarizes the current state of Apple's shares as 'oversold and undervalued.'

"We would be buyers of the stock at these levels, given our Asian checks on Mac production, and especially given we believe the main driver for the company and its stock near-term is notebooks and desktops," he wrote. "With the stock currently trading at 21 times our “cash” earnings-per-share estimate for fiscal 200, relative to a 4-year median multiple of 32 times (and typically 25+), we view the risk-return profile as more compelling following the sell-off post December quarter earnings."
post #2 of 34
If this bank wants to avoid being seen as another American company which is fleeing its American roots, it had better be reminded that bank is spelled with a "k" in English. If it wants to have a French name, maybe it ought to move there. Maybe is has.
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post #3 of 34
I'd say that selling more Macs is more favourable to Apple's bottom line than selling iPods. I hope the investors see it that way.

PS: I'm pissed I didn't get in Yahoo when I first caught wind of this potential buyout from MS.

Quote:
Originally Posted by Robin Huber View Post

If this bank wants to avoid being seen as another American company which is fleeing its American roots, it had better be reminded that bank is spelled with a "k" in English. If it wants to have a French name, maybe it ought to move there. Maybe is has.

"Banc of America Securities LLC (BAS), based in New York City, is the investment banking subsidiary of Bank of America."

http://en.wikipedia.org/wiki/Banc_of_America_Securities
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post #4 of 34
Normal iPod seasonality would suggest at least a 38% cut in production for the March quarter. Since the touch is so popular, second in sales to the nano, an adjustment in the mix was called for anyway, plus, as stated, the ASP is higher at $181. The iPod touch now has more functions that it did initially. If production is reduced by 45% but at that higher ASP, revenue for the quarter will see the normal seasonal decline.

It makes sense for iPhone sales to lag over the next 4 months ahead of the 3G iPhone. Fortunately, Mac sales will help make up the difference. There's also the deferred revenue to consider.

My target EPS for this quarter is $1.20. Apple estimated .94 and the Street average is $1.04.

AAPL is way oversold and definitely a strong buy here.
post #5 of 34
Quote:
Originally Posted by Robin Huber View Post

If this bank wants to avoid being seen as another American company which is fleeing its American roots, it had better be reminded that bank is spelled with a "k" in English. If it wants to have a French name, maybe it ought to move there. Maybe is has.

Perhaps a little due diligence is required on your part. Banc of America, whose full name is Banc of America Securities is the investment banking subsidiary of Bank of America. Nothing more. Nothing less.

Update: I see Solipsism beat me on this. That will teach me to answer the phone.
post #6 of 34
Quote:
Originally Posted by Robin Huber View Post

If this bank wants to avoid being seen as another American company which is fleeing its American roots, it had better be reminded that bank is spelled with a "k" in English. If it wants to have a French name, maybe it ought to move there. Maybe is has.

In French you spell Bank "BANQUE". "Le banc" is a bench like in park bench.

So right now this company would be -if any- the Bench of America
post #7 of 34
Quote:
Originally Posted by freelander51 View Post

In French you spell Bank "BANQUE". "Le banc" is a bench like in park bench.

So right now this company would be -if any- the Bench of America

Bank does come from the word bench so it's an understandable mistake.
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post #8 of 34
Quote:
Originally Posted by solipsism View Post

Bank does come from the word bench so it's an understandable mistake.

Point taken - but the origins are in Italy this time from the word Banca - the bench where the money 'operators' used to sit on at the time (14th century and earlier)

The french word derived from this one. and that probably goes even further back to the roman empire, which in turn probably copied the old egyptians and/or the traders in the temple.

Anyway - enough of this back to more serious things
post #9 of 34
Does this mean we may see a name change back to Apple Computer again?
post #10 of 34
Ya know, maybe they wouldn't have to cut iPhone production if they just sold it in a few more countries...
post #11 of 34
Quote:
Originally Posted by Abster2core View Post

Perhaps a little due diligence is required on your part. Banc of America, whose full name is Banc of America Securities is the investment banking subsidiary of Bank of America. Nothing more. Nothing less.

Update: I see Solipsism beat me on this. That will teach me to answer the phone.

I was aware of the spelling differentiation between the subsidiary and the parent company. But that was not the point. My comment addresses the need they seem to have to employ, let's call it "Frenchified" or non-English spelling to be more correct, such a name for what is supposed to be an American company. God knows were are exporting enough jobs to other countries, and re-naming good old American ones with foreign sounding names just rubs salt in the wounds. So what if it's an investment bank subsidiary, it's still in New York isn't it? Banc just sounds to precious and pretentious for an American company, doesn't it?

Oh, and before some nit-picking historian out there chimes in about my assertion at it is an "all-American company", I know that BofA was founded in San Francisco as the The Bank of Italy by the Giannini family. But they were Italian-American. My father told me that story years ago, I didn't get it from a quick trip to Google.

Sorry, just feeling bitchy and crusty today.
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post #12 of 34
Quote:
Originally Posted by Banalltv View Post

Ya know, maybe they wouldn't have to cut iPhone production if it was for sale in a few more countries...


That's the one thing I find that is always lacking from these talks I've been hearing about iPhone sales projections for '08.


I would be very surprised if Apple DOESN'T start selling iPhones in more than a couple new countries this year (Canada, Italy, Japan, are some of the heavily rumored "next stops").
post #13 of 34
Quote:
Originally Posted by solipsism View Post


PS: I'm pissed I didn't get in Yahoo when I first caught wind of this potential buyout from MS.

Buying Yahoo on its own merits would have been suicidal, and buying based on a potential buyout would have required psychic abilities (or inside info).
Only ones to benefit were inside traders (who don't deserve their gains) and long-term holders (who do.)
post #14 of 34
Quote:
Originally Posted by Robin Huber View Post

I was aware of the spelling differentiation between the subsidiary and the parent company. But that was not the point. My comment addresses the need they seem to have to employ, let's call it "Frenchified" or non-English spelling to be more correct, such a name for what is supposed to be an American company. God knows were are exporting enough jobs to other countries, and re-naming good old American ones with foreign sounding names just rubs salt in the wounds. So what if it's an investment bank subsidiary, it's still in New York isn't it? Banc just sounds to precious and pretentious for an American company, doesn't it?

Oh, and before some nit-picking historian out there chimes in about my assertion at it is an "all-American company", I know that BofA was founded in San Francisco as the The Bank of Italy by the Giannini family. But they were Italian-American. My father told me that story years ago, I didn't get it from a quick trip to Google.

Sorry, just feeling bitchy and crusty today.

In the United States, a financial business can only be called a "Bank" if it is, in fact, a bank.

As others have pointed out, the business called "Banc of America Securities" is the investment banking subsidiary of Bank of America, and is not, technically, a bank.

As for the spelling being Frenchy. Whatever.
post #15 of 34
Quote:
Originally Posted by NeverInDoubt View Post

In the United States, a financial business can only be called a "Bank" if it is, in fact, a bank.

As others have pointed out, the business called "Banc of America Securities" is the investment banking subsidiary of Bank of America, and is not, technically, a bank.

As for the spelling being Frenchy. Whatever.

Thanks for that. It least it makes some sense out of it for me.
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post #16 of 34
Quote:
Originally Posted by Banalltv View Post

Ya know, maybe they wouldn't have to cut iPhone production if they just sold it in a few more countries...

Or sold it UNLOCKED.
post #17 of 34
Yea locking the Iphone in with AT&T was a bad move for Apple- I want one but I am not going with AT&T so I'm not getting one. I don't see why they did that- the real money with phones is in the contract not the phone anyway.
post #18 of 34
Quote:
Originally Posted by tuneman07 View Post

the real money with phones is in the contract not the phone anyway.

That may be true for giveaway phones, but when you sell them at $400 a pop, and you do much of it directly (not through carriers), I'd call that real money. Besides, Apple's model is to come out with something even better year after year, so those buyers will be repeat customers. Apple has reinvented the phone business, not just the phone.
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post #19 of 34
No seriously, can we please keep talking about the whole "Banc" vs. "Bench" thing? That's so much more interesting and important than anything else in this story.
post #20 of 34
Well, my 15 year-old granddaughter saved up and bought a MB. Her 18 yr-old sister's Dell just crashed. Again. Her dad and I promised her a MBP to take to college. My son has absolutely committed himself to a new Mac when he replaces HIS Dell.

I've done my job here on earth, now, and have converted a load of unbelievers to the sweet side. Why did it take so long? I wonder if a 20% increase in Mac orders is ENOUGH?
post #21 of 34
Quote:
Originally Posted by Robin Huber View Post


Sorry, just feeling bitchy and crusty today.

And more than a little bit xenophoibic.
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post #22 of 34
Quote:
Originally Posted by houseley View Post

And more than a little bit xenophoibic.

"xenopho…" what?


A little late aren't you?

After all , he did come about. And if you are going to come down so hard again, perhaps a lesson in spelling would help your cause.
post #23 of 34
Quote:
Originally Posted by Abster2core View Post

"xenopho" what?


A little late aren't you?

After all , he did come about. And if you are going to come down so hard again, perhaps a lesson in spelling would help your cause.

Thanks for the defense--much appreciated.

But actually, I knew I was laying myself open to that charge as I wrote. On some issues, such as American companies going offshore to avoid taxes, and exporting too many jobs, I get a touch of xenophobia. But in reality I am a major internationalist, and Lou Dobbs drives me up a tree. My last international vacation was to Paris and I loved it--I love everything about the French (except their xenophobic tendencies) ;-)
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post #24 of 34
Quote:
Originally Posted by Banalltv View Post

Ya know, maybe they wouldn't have to cut iPhone production if they just sold it in a few more countries...

You know, I almost read some profound background music when I read this (like that guy "Eli Stone" last night). Then again, I'd read enough on park benches before hand so it may have made this stand out.

Come on SingTel and subsidiaries.
Come on Unlocks at the same standard price.
Come on similar prices as the US, in Europe etc.
Come on $100 rebate for those who are on contract, after 6 months.
post #25 of 34
Quote:
Originally Posted by tuneman07 View Post

Yea locking the Iphone in with AT&T was a bad move for Apple- I want one but I am not going with AT&T so I'm not getting one. I don't see why they did that- the real money with phones is in the contract not the phone anyway.


Didn't you just answer your own question? They locked it in because the real money is in the contract, not the phone. Apple gets a significant cut of the contract.
post #26 of 34
It sure would be amusing (but now just pitiful) if customers that had gone into the Apple stores to buy iPods, decided to buy desktop Macs instead. It's a darn shame that WS doesn't understand that for a given amount of people, one person probably can't afford to buy every product in Apple's lineup. They may only have a choice to buy one item. Instead of an iPod, they buy an iPhone or vice-versa. Or they may just splurge to get an iMac. What's so bad about one Mac product losing out to the other as long as the profit margin is high. Instead WS had to keep focusing on lower iPod sales instead of increased notebook or iMac sales. WS really sucks. Everyone completely overreacted and groin kicked Apple's share price. I still feel that the economy downturn hit Apple at the worst time and it should have been their finest hour (quarter). Screw short-sighted investors.

I don't know why they keep talking about the decline of the iPod. I mean, they do break and eventually they'll have to be replaced. Maybe a whole generation will start to fail at one time and need replacement. That could boost iPod sales.

That being said, I'm really concerned about iPhone sales in China. Apple needs China to boost "lackluster" iPhone sales. Maybe it won't matter if iPhone 2.0 offers some really great hardware feature set or if the SDK allows for some compelling enterprise business demand. (Please let IT find a must hae use for the iPhone)
post #27 of 34
Quote:
Originally Posted by OldMacGuy View Post

Well, my 15 year-old granddaughter saved up and bought a MB. Her 18 yr-old sister's Dell just crashed. Again. Her dad and I promised her a MBP to take to college. My son has absolutely committed himself to a new Mac when he replaces HIS Dell.

I've done my job here on earth, now, and have converted a load of unbelievers to the sweet side. Why did it take so long? I wonder if a 20% increase in Mac orders is ENOUGH?

Oh, so that's what happened:

http://www.iht.com/articles/ap/2008/...ll-Layoffs.php

Btw, I don't wish Dell or anyone bad luck.
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post #28 of 34
the only way apple are going to increase by 20% is to bring out new macbooks...
post #29 of 34
And MacBook Pros.
post #30 of 34
You "american" guys drink so much coke your brains have become damaged! You spend your time discussing silly stuff [for this forum] like spelling with pseudo-patriotic sentiment - where's your patriotism when Uncle Sam calls you to go to Iraq, you fat burger-eating-coke-drinking ss? - instead of reading the article with some kind of critical mind! Shame on you!

Did you know coke is used by air stewardesses to wash passengers puke clean? Did you know it's effectively used to unclog toilet drains?! It's with that air head attitude you let yourselves swallow the crap from these so-called analysts!

These guys might have BAs and Master Degrees in wtfism and speak gibberishaista like mean moving average [poor little average, what's it done wrong?] and such but they can't figure out zilsch, nada, zero about Apple even if it would be crammed up their nose

So they predicted a 50% cut in production and they saw a 55% increase on their prediction instead? Hello? And "it's still down from 2 months ago", you mean the holiday season as opposed to the slowest quarter in the year?! Who should we fire today?!

This is what you guys and girls (yeah, right) should all be talking about - how Apple is being hampered on a daily basis by these shaister pseudo-analysts that spend their day sitting on their fat burger-eating-coke-drinking ss trying to come up ways to justify their overblown analyst $250,000+ salaries instead of really working things out!

AHAH sad figures, scratching your bums and farting in front of your computers - go get a life! Wait, are you scratching your head with the same finger you just scratched your bum and fingered your nose?! Geez!

Jobs has VISION and he knows consumers will retract in 2008, that's a given.

But wait, he might also be preparing to revolutionize his own revolution and change his iPod business all together into this new Touch based platform thus replacing current iPods with no Touch capabilities that, by the way, have little to fit in iTunes' rental scheme! Doesn't that mean lowering non-Touch iPod orders and increase Touch ones? Doesn't this fit with a whole new line fully Touch-based models showing up in mid 2008, maybe sooner?

Didn't anybody get Oppenheimer's loud and clear statement that the iPod Touch was a computer platform in itself and didn't anybody link that strategy wise to the MacBook Air? Don't you think the MacBook Air makes little sense on its own UNLESS it is part of a whole new strategy and product line for Apple? [unless he's setting himself up for another Cube but I don't think so]

Didn't you get that the MacBook Air is not the kind of notebook we're used to but a peripheral to a desk based iMac or Mac Pro just like any iPod or iPhone, instead?

Don't you see there was in fact a missing piece between the iPod Touch and the MacBook Air at MacWorld that would have the whole "There's Something In The Air" line make sense?!

Was it just me that missed the lusted for 2008_Newton/Mac_UMPC that was perhaps supposed to have been announced at MacWorld and fill the gap between iPod Touch and MacBook Air thus have it all make sense as a new strategy and line of conduct for Apple for 2008 and beyond?! Jobs must have ran into some unforeseen trouble that prevented him to launch the machine, I'm sure... but then he said 'there are 50 more weeks left in 2008'...

Didn't you realise that Steve Jobs let it slide not to make a really big One More Thing announcement at MacWorld because he is so confident of the splash the new products he's preparing to launch will make?!

Can't you put 2 and 2 together and see the iPhone/Touch, new Touch MBPros and 10.5.2 coming up making it an excellent time to do his famous "One More Thing" that'll make AAPL rise like crazy? Don't you think he needs that?!

Can you not feel his vengeance wish building up towards these analysts that helped AAPL lose big time recently, more than NASDAQ? He'll just roll and laugh himself off to tears thinking of them when he gets this rabbit out of his hat...

Oh, one more thing, Apple might also be opening up its products to the enterprise market as they've already started doing with the iPhone through AT&Cingular- and I'm talking about corporations since the SOHO entrepreneurs are getting into the Apple wagon in droves already. Corporations need MBPs and MBAs to show off [yes, the MBA is a so called vanity product, that strategy worked with the iPhone so...] and Jobs will gladly supply them the good stuff! That's one way the MBA makes sense!

I apologize for the flaming and thank you good Apple fanboys for your time / attention, wishing you all, die-hard Mac fans of the world (unite), the best 48 weeks ever!
post #31 of 34
Quote:
Originally Posted by Constable Odo View Post

WS really sucks. Everyone completely overreacted and groin kicked Apple's share price. I still feel that the economy downturn hit Apple at the worst time and it should have been their finest hour (quarter). Screw short-sighted investors.

Totally with you, Constable!
post #32 of 34
oh, dear g-d. what was that post (see above), a little too much caffeine?

Honestly, as an investor, I would trade ipods sales for computer sales any day of the week -- just look at the margins on computers! or maybe the numbers -- what percentage of apple's profit is from computer sales vs. ipod, despite nearly an order of magnitude difference in unit sales (I am making that figure up... too tired to do my homework).

happy banc/bank bickering!
post #33 of 34
The problem that arises now is that for the sceptics it looks a lot like a fashion-fluke. iPods out of hype, Macs are out of hype next, Apple goes down... was designed well but overpriced ... the whole usual bla-bla.

They are transitioning from iPod to iPhone and its not gonna be easy, because they have to pull the same trick against stronger competitors (Nokia vs Creative anyone?). If it works, great, if it doesn't, watch Mac sales drop too.
post #34 of 34
Quote:
Originally Posted by XamaX View Post

You "american" guys drink so much coke your brains have become damaged! You spend your time discussing silly stuff [for this forum] like spelling with pseudo-patriotic sentiment - where's your patriotism when Uncle Sam calls you to go to Iraq, you fat burger-eating-coke-drinking ss? - instead of reading the article with some kind of critical mind! Shame on you! ...

How irrelevant.
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