AmTech maintains view on new nano, quarter
After digesting Apple Computer's third quarter results and current quarter guidance, analysts at American Technology Research remained steadfast in their views that the next-generation iPod nano may see delays and that some other analysts have set unreasonable expectations of the company.
In a brief research note, analyst Shaw Wu said the highlights of Wednesday's Apple earnings report are that the company's Mac business is re-acceleration and despite fears to the contrary, iPod demand is relatively healthy.
"We continue to believe that new iPod nano refreshes will most likely occur in the late-September/October timeframe," the analyst told clients.
In dissecting Apple's upbeat earnings report, Wu said "bulls" are likely to point at Apple's favorable gross margin of 30.3 percent or that fact that the company's net cash grew almost $1B since the previous quarter.
The analyst, who estimates Apple's iPod installed base is now at 58 million, said the bulls are just as likely to point towards Apple's respectable iPod and Mac unit shipments, its 13 percent operating margin or its stellar inventory management.
On the flip side, Wu said the "bears" are likely to point out Apple's weakness in Japan, where revenues declined 16.5 percent sequentially to $258M.
Bears, he said, may also signal towards the declining average selling price (ASP) of iPods (by 8 percent to $185), flat iTunes music store profits, and an increase in DSOs (Days Sales Outstanding) to 24 days, which typically indicates a back-end loaded quarter.
"For the September quarter, Apple guided to $4.5 - $4.6 billion and $0.46 - $0.48 (vs. consensus of $4.94 billion and $0.52), in another attempt to reign in unreasonable expectations," Wu wrote. "We are leaving our forward estimates essentially unchanged for fiscal year 2006 at $19 billion in revenue and $2.14 in EPS (from $19.1 billion and $2.02 ) and for fiscal year 2007, $22 billion and $2.45 (from$22.1 billion and $2.45)."
"Our hope is that our sell-side peers follow Apple's revenue guidance more carefully and make more reasonable forward assumptions," the analyst added.
Wu maintains a Buy rating on shares of Apple with a price target of $75.
In a brief research note, analyst Shaw Wu said the highlights of Wednesday's Apple earnings report are that the company's Mac business is re-acceleration and despite fears to the contrary, iPod demand is relatively healthy.
"We continue to believe that new iPod nano refreshes will most likely occur in the late-September/October timeframe," the analyst told clients.
In dissecting Apple's upbeat earnings report, Wu said "bulls" are likely to point at Apple's favorable gross margin of 30.3 percent or that fact that the company's net cash grew almost $1B since the previous quarter.
The analyst, who estimates Apple's iPod installed base is now at 58 million, said the bulls are just as likely to point towards Apple's respectable iPod and Mac unit shipments, its 13 percent operating margin or its stellar inventory management.
On the flip side, Wu said the "bears" are likely to point out Apple's weakness in Japan, where revenues declined 16.5 percent sequentially to $258M.
Bears, he said, may also signal towards the declining average selling price (ASP) of iPods (by 8 percent to $185), flat iTunes music store profits, and an increase in DSOs (Days Sales Outstanding) to 24 days, which typically indicates a back-end loaded quarter.
"For the September quarter, Apple guided to $4.5 - $4.6 billion and $0.46 - $0.48 (vs. consensus of $4.94 billion and $0.52), in another attempt to reign in unreasonable expectations," Wu wrote. "We are leaving our forward estimates essentially unchanged for fiscal year 2006 at $19 billion in revenue and $2.14 in EPS (from $19.1 billion and $2.02 ) and for fiscal year 2007, $22 billion and $2.45 (from$22.1 billion and $2.45)."
"Our hope is that our sell-side peers follow Apple's revenue guidance more carefully and make more reasonable forward assumptions," the analyst added.
Wu maintains a Buy rating on shares of Apple with a price target of $75.
Comments
Originally posted by BRussell
Wow, Appleinsider has really become THE place for financial analysts.
Indeed.
Originally posted by SpamSandwich
Wu leaves more "backdoors" in his analysis than Alan Greenspan. Talk about trying to have it both ways!
Argh! I don't need that image in my head. j/k
Wu maintains a Buy rating on shares of Apple with a price target of $75.
I don't give a ***** !
If I would own Apple shares I had better resources to find the current rating.
And who are those analysts? It could be my grandmother for all I know.
Originally posted by dacloo
I don't give a ***** !
If I would own Apple shares I had better resources to find the current rating.
And who are those analysts? It could be my grandmother for all I know.
If you family name was Wu.. could be.
Bears, he said, may also signal towards the declining average selling price (ASP) of iPods (by 8 percent to $185), flat iTunes music store profits, and an increase in DSOs (Days Sales Outstanding) to 24 days, which typically indicating a back-end loaded quarter."
Apple is high status in Japan .. find a BMW or Mercedes and there is one of those Apples sitting on the seat. This is justified as it is a closed and very rough market. but, any set back is only a new opportunity as nuttin much is new over there to worry about as an ipod killer or computer killer. They kept Itunes out (not entry in market until recently) until the phone business was developed and that is a high ratio music download conduit instead of computer downloads. Apple might make more progress when their nifty new phone comes out next xowkdc0oieaclkasdlkiod
Oh, this ipod thingie is such a wasted emotion for analzits to focus on. Apple promotes their line with almost no competition. they get more than anyone would ever expect in a competitive consumer electronics environment. So, we have this great format (itunes) and player and so on - with nobody at their heels tryiing to trip them. nothing can push them out of their chair. so what happens? the product cycle of conversion to digital goes at a healthy pace (see this year versus last year) with a couple of billboard ads and that is about it. No new products needed to capture a big majority of the business. And, even though apple could have sold a lot more by targeting price points with all that excessive (license to steal) margin they are salting away. Why should they? they got it all the way they are doing it so why discount product to compete with their own product? that doesn't work. So, the analzits worry it is all over. Everyone is going to go backwards and buy CD players again or ..?
the product cycle of going digital is the way the present and future are going to listen to, buy and archive their music. Nothing has changed except a analzit twit thinks what is a normal "no competition" product cycle sell through is slowing down. Well, after about another 100 million of them are sold, purchased, replaced, first time purchases etc.. are in every room of the house and a few broken ones are in the Garage.. it will be just a 20% or more growth per year (new buyer plus replacement buyer) until the next wave of product comes along.
Invest long.. this thing has got a lot of good months and years left in it before sales are going to level of to Dell doldrums or MS miasma. apple forecasts have been very good with some quarters just 2 cents over their estimate. Increased profit generally seems to be as a result of reduced commodity prices with predictable results. knowing commodity prices are falling and apple prices are staying put means more margine. Wu is right to suggest watching the estimate and let it sit (but then the analzits have nothing to do so they oversell it and then undersell it and the wild swings in steady growth and growth estimates are distorted).
DSO's slowing down? well, when you kick a__ with computer sales the amount of time to collect the money might go up slightly (financinng premiums pay off or credit cards pay off). this seems like a natural sign of expanded growth in their kind of business. Or, you shove old computers down the thoat of loyal dealers to be rid of them you need to extend the terms to these customers. This is not bearish - this is good business with new sales on computers and getting rid of the old stuff sitting on the shelf.