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Analysts trim Apple estimates amid weaker iPhone, Mac sales

post #1 of 12
Thread Starter 
A pair of Wall Street analysts tightened their estimates for Apple's 2009 fiscal year on Tuesday, citing softening demand for Macs in the United States and weaker than expected iPhone growth in Europe.

In a report to clients Tuesday, Kaufman Bros. analyst Shaw Wu said his latest round of supply chain and distribution checks reveal weaker sell-through of the company's clip-on iPod shuffle but strong sales of iPod nanos and iPod touches.

"While we continue to see strong demand for iPod touch and iPod nano with spot shortages across several key retailers, what is new is that we are seeing weaker-than-expected iPod shuffle sell-through," he wrote. "We are hearing the reason for this is that customers are opting to purchase higher-end, more functional iPods instead, simply because the value of an iPod is well known and understood."

Going forward, Wu said Apple may need to drop the price of the entry-level music players below their respective $49 and $69 price points to "regenerate excitement" in the marketplace.

Given these findings, the analyst lowered his December quarter iPod forecast to 19 million units from 21 million units, but raised his average selling price estimate by $7 to $159 to account for stronger sales of the pricier iPod nano and iPod touch models.

Meanwhile, Wu said his sources indicate that demand for the iPhone 3G in the U.S. remains fairly strong, while Europe is seeing surprisingly slower growth that may persists for the foreseeable future. He also remains concerned that iPhone Gift Card sales could understate iPhone results for the current December quarter, with many gift-getters unlikely to cash in their cards for actual iPhones before the new year.

As such, Wu is "opting to be conservative" by reducing his December quarter iPhone unit forecast to 5.5 million units from 6 million units, but raising his March quarter estimate to 4.7 million units from 4.5 million units to account for his expectation of late gift card redemptions.

For the December quarter, his fiscal estimates remain relatively unchanged at $10 billion in revenue and $1.47 in per-share earnings (EPS), slightly above consensus estimates at $10 billion and $1.42.

"For fiscal 2009, we are now at $35.2 billion in revenue and $5.05 in EPS down from $35.5 billion and $5.05, respectively and for fiscal 2010, we estimate $42.4 billion in revenue and $6.45 in EPS, down from $42.8 billion and $6.45, respectively," he wrote. "We remain materially below consensus (particularly for revenue) for fiscal 2009 and 2010 even though our peers have reduced estimates in recent weeks."

Over at Needham & Co., analyst Charles Wolf made similar adjustments to his fiscal 2009 estimates after digesting NPD data from Monday that suggests Mac sales in the December quarter are modestly softer than he had previously estimated.

The market research firm said Mac notebook sales rose approximately 22 percent year-over-year during November while desktops fell 38 percent, resulting in Mac sales being relatively flat for the month.

"The November sales number must be placed in perspective. It represents less than 5% of Apple’s December quarter sales," Wolf advised clients. "Nonetheless, it signals that the current recession is probably more severe and pervasive than it appeared to be in October and thamost likely extend at least through the first half of calendar 2009."

Wolf consequently reduced his 2009 revenue forecast from $38.2 billion to $36.6 billion and his 2009 EPS estimate from $5.65 to $5.20.

"The adjustments to our model are relatively modest because a growing stream of iPhone revenues in 2009 should offset some of the weakness in Mac and iPod sales," he explained. "iPhone revenues are amortized over eight quarters and should continue to grow throughout 2009, reflecting the acceleration of iPhone sales following the launch of the 3G model in July."

Both Wu and Wolf recommend that investors build positions in Apple, with Wu listing the company as a "Buy" alongside a $120 price target and Wolf advocating shares as a "Strong Buy" with a $240 price target.
post #2 of 12
Typical analysts action before any major Apple event. After the event they will reverse course.
post #3 of 12
Quote:
Both Wu and Wolf recommend that investors build positions in Apple, with Wu listing the company as a "Buy" alongside a $120 price target and Wolf advocating shares as a "Strong Buy" with a $240 price target.


I prefer Shaw Wu's estimate which looks more realistic for the coming year. No one knows what Apple will be doing in 5 years, so that a share price target of $240 is meaningless.

post #4 of 12
These analysts actually are retarded.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
Reply
post #5 of 12
Desktop Mac sales are down? Duh! Updates on the way so that's normal.

New MacBook and MacBook Pro sales are excellent.

Lower estimates for iPods? Sure, but higher revenues.

Lower iPhone sales? The iPhone was last updated nearly 6 months ago and a product refresh is due soon.

Apple's Q1 earnings are going to be much better than expected and there will probably be little effect from the economy. What's affecting sales more than anything else is normal product cycles.

BTW, my new MBP/2.8GHz/320G 7200 rpm is running great on 10.5.6.
post #6 of 12
Groan! A $240 price target? He's clearly overdosed on Apple Kool-Aid. Apple is sitting at $95 a share and the economy is probably gonna sink further if the Big Three auto industry collapses which will take the whole market down. Apple will be lucky to see $100 before the end of the year and maybe $105 slightly before or after earnings. $240 is un-effing-believable for a stock that's having trouble holding $95 during it's best quarter and every analyst and their mother downgrading Apple in rapid succession. The higher Apple's cash reserve, more iPhones sold and number of retail store increases, the further the stock goes down. Regardless of the reason, Apple cannot possibly succeed in raising it's stock value one iota. As soon as it goes up, it will be downgraded and the media hasn't even bothered to pull the "Steve Jobs near death's door" ploy in months to sink it further. \

This week, everywhere I looked it was "Apple sales slipping" and "market share declining" and "end of iPod growth". I'm sure there is something to this flurry of negative press due to the poor economy. Apple's share price has still been standing relatively steady, thank goodness. But I get really annoyed when I hear about Apple's share price going through the roof. It's that false hope crap than drives me crazy. I heard it last year and now my Apple stock is half it's former value like every other tech stock around. I need to stop reading these articles to keep my sanity.

WS requires Apple to sell 20% more products than any other company just to keep the stock price steady. A 1% drop in sales is like the kiss of death for Apple.
post #7 of 12
Your average consumer is clueless about processors and chipset and possible updates.

However the segment of the market that follows these things knows that Apple will be updating their iMac and Mac mini with chipsets similar to what they have put in their notebooks.
This segment is not buying desktops till after the holidays.
post #8 of 12
Apple has a golden opportunity here with the Mac mini to create an affordable and compelling switcher.

Due to Vista many consumers don't want to buy a PC.
Due to the economy many consumers can't afford to buy a Mac.

A base Mac mini at the $500 price point that isn't significantly crippled as past Mac minis have been would be exactly what Apple needs to get going in this economy.
post #9 of 12
Quote:
Originally Posted by AppleInsider View Post

Both Wu and Wolf recommend that investors build positions in Apple, with Wu listing the company as a "Buy" alongside a $120 price target and Wolf advocating shares as a "Strong Buy" with a $240 price target.

Gaze into my Crystal Ball...

Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

Reply

Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

Reply
post #10 of 12
Quote:
Originally Posted by Rolo View Post

Apple's Q1 earnings are going to be much better than expected and there will probably be little effect from the economy.

Flat Mac sales for the quarter would point to moderate growth in Y/Y EPS, but $1.42 is a 19% drop in revenue. Of course, the NPD data is just US Domestic sales and it looks like Apple will take their biggest hit in ROW sales.

But the idea that the iPod shuffle needs a price drop to generate interest is just a joke. The product needs to fade out entirely over time; the remainder of the line is more attractive to most consumers now.
post #11 of 12
Quote:
Originally Posted by Johnny Mozzarella View Post

Apple has a golden opportunity here with the Mac mini to create an affordable and compelling switcher.

Due to Vista many consumers don't want to buy a PC.
Due to the economy many consumers can't afford to buy a Mac.

A base Mac mini at the $500 price point that isn't significantly crippled as past Mac minis have been would be exactly what Apple needs to get going in this economy.

I am with you. i'd love one as a media center/apple tv type device.

but... i'd really prefer a midsized upgradable tower which is affordable, yet upgradable and has power
post #12 of 12
This is a truely strange story. It sounds like Wu is concerned that people are switching to Apple's higher margin products rather than buying the low margin product. I would have thought that was a good thing?
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