Citigroup cuts Apple rating, predicts sales of 18.8M iPods in Q4

Posted:
in iPod + iTunes + AppleTV edited January 2014
Analysts for Citgroup on Monday said they expect Apple Computer to sell as many as 18.8 million iPods during the December quarter, but cut their rating on shares of the company to "Hold" from "Buy" due to a lack of potential revenue upside in the near term.



"The sum of a week’s worth of Asian data points suggests little potential for upside to consensus revenue estimates for either the September or December quarters," analyst Richard Gardner told clients in a research note on Monday."While we are modestly raising our September and December quarter revenue estimates, our new estimates are not meaningfully above current consensus."



For the third calendar quarter ending September, the analyst increased his revenue estimate from $4.63B to $4.68B to reflects stronger-than-expected MacBook sales. He said MacBook sales for the quarter are now tracking close to 575,000 units compared to his previous estimate of 540,000 units. He is also modeling for sales of 9 million iPods during the quarter, including 5 million iPod nanos and 1 million iPod shuffles.



18.8M iPods and 1M notebooks in Dec. quarter



Similarly, the analyst upped his fourth calendar quarter (ending December) revenue estimate from $6.31B to $6.47B on expectations that both MacBook and iPods sales will track significantly higher. "We have raised our MacBook shipment estimate from 600K to 675K and our overall laptop shipment estimate from 925K to 1.0M, " he wrote. "We have raised our iPod shipment estimate from 16.0M to 18.8M to reflect an increase in “nano” shipments from 8.5M to 10.0M and an increase in “shuffle” shipments from 2.5M to 4.0M."



No "real" video iPod this year



Meanwhile, Gardner said his checks now indicate that a video iPod with larger screen and virtual Click-Wheel is unlikely to make an appearance before the peak holiday season. "The iPod line announced on September 12 appears to be the line that will have to carry Apple until MacWorld San Francisco in January," he wrote. "This is likely to disappoint some investors who are still expecting at least one more new product before the peak holiday selling season."



No iPhone at Macworld, 25M sales estimates too bullish



Gardner also said checks suggest volume availability of an Apple-branded mobile phone is unlikely until later in the first calendar quarter of 2007 or early in the second quarter. "Given that Apple’s phone will almost surely cannibalize a portion of iPod nano sales, we doubt management will introduce the product at Macworld San Francisco in January, a full quarter ahead of availability, for fear of negatively impacting nano sales," he explained. "We also believe Apple’s phone sales will be limited to the U.S. market during the initial 6-12 months and that the product be relatively expensive -- in the top 25th percentile of the current phone industry range --suggesting that recent press reports of up to 25M units during the first year are significantly too bullish."



"We might reconsider our Hold rating and potentially become more interested again for fresh money, all things being equal, on a pullback below $71, at which point the shares would offer 20 percent upside to our 12-month target," Gardner continued. "We believe the lack of additional new products through year-end and the lack of a phone announcement in January could provide such an opportunity."



Despite cutting his rating on Apple, Gardner increased his price target on shares of the company from $80 to $85.
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Comments

  • Reply 1 of 23
    Quote:
    Originally Posted by AppleInsider


    "Given that Apple?s phone will almost surely cannibalize a portion of iPod nano sales, we doubt management will introduce the product at Macworld San Francisco in January, a full quarter ahead of availability, for fear of negatively impacting nano sales," he explained. "We also believe Apple?s phone sales will be limited to the U.S. market during the initial 6-12 months and that the product be relatively expensive -- in the top 25th percentile of the current phone industry range --suggesting that recent press reports of up to 25M units during the first year are significantly too bullish."



    How expensive does the iPhone have to be to qualify as "relatively expensive", in the U.S.? (not familiar with cell phone pricing schemes in the States)



    if that is in the price range of the nano, then yes, could take away some sales. Then again, they are different business models as some cell phones require that you sign up for a plan and the main purpose of the device is different. It might not be the same crowd going for the nano. It all depends on how well Apple integrates music playing with the phone. Battery life is a concern I have.
  • Reply 2 of 23
    wingswings Posts: 261member
    Let's see... they raised their estimated sales volume by around 10%, raised their estimated revenue by a few percent, raised their price target by 6%... and cut the rating from buy to hold.



    Makes a lotta sense, huh?
  • Reply 3 of 23
    Nothing but a ruse to get the share price down to allow for one last accumulation of shares before the earnings reports come out.
  • Reply 4 of 23
    So this is what caused the stock to drop 2$... and this happened before the news were posted on this site.... where do the stock brockers get their information from?
  • Reply 5 of 23
    g5mang5man Posts: 91member
    Quote:
    Originally Posted by MacCentric


    Nothing but a ruse to get the share price down to allow for one last accumulation of shares before the earnings reports come out.



    my sentiments exactly



    this happens everytime the stock goes up about 20%



    it is a familiar pattern with these clowns.



    ML is the worst. They upgrade the stock after it already went up 40%.
  • Reply 6 of 23
    g3prog3pro Posts: 669member
    Quote:
    Originally Posted by MacCentric


    Nothing but a ruse to get the share price down to allow for one last accumulation of shares before the earnings reports come out.



    Wow, you have no idea of how market forecasts work.
  • Reply 7 of 23
    Based on unfounded rumors, hearsay, conjecture and speculation, we are raising...uh, wait a minute...oh, yes, lowering... yes, yes, we're lowering our outlook.



  • Reply 8 of 23
    crees!crees! Posts: 501member
    Quote:

    Meanwhile, Gardner said his checks now indicate that a video iPod with larger screen and virtual Click-Wheel is unlikely to make an appearance before the peak holiday season.



    Hmm.. his "checks" indicate. My guess would be that his "checks" are to that of Think Secret's "Secret Notes" section
  • Reply 9 of 23
    Quote:
    Originally Posted by SpamSandwich


    Based on unfounded rumors, hearsay, conjecture and speculation, we are raising...uh, wait a minute...oh, yes, lowering... yes, yes, we're lowering our outlook.











    SpamSandwich, get the Wu on the phone right now. We oughta end this nonsense. Let the Wuman explain all this financial jargon to all of us in plain English.
  • Reply 10 of 23
    mr omr o Posts: 1,042member
    Quote:
    Originally Posted by monkeyastronaut


    It all depends on how well Apple integrates music playing with the phone. Battery life is a concern I have.



    I'd be surprised if Apple is going to release a Phone.



    They'd rather make the video iPod iChat ready so one could communicate from his video iPod with people using Macbooks etc. An iPod with build in iSight would therefore make all the other existing music Phones obsolete.



    So, forget about the current phone companies. Speech should be free and Apple has the software to do so!
  • Reply 11 of 23
    Quote:

    He said MacBook sales for the quarter are now tracking close to 575,000 units compared to his previous estimate of 540,000 units



    I thought A. N. Other (the Mighty Wu) Analyst was tracking Macbooks at 750,000 this quarter?

    when do we find out the figures 2-3 weeks?



    Also absolutely no mention of Destop hardware... A big miss, Anybody?



    Possibly, the loss of a potential iPhone and Video iPod in near term could reflect as $2-3 on the share price. But if you don't include the other things then whats the point?
  • Reply 12 of 23
    e1618978e1618978 Posts: 6,071member
    The news item on yahoo finance makes more sense - he thinks that revenue growth will slow from 37% down to 12% over the next two years. This slowdown in revenue growth is what prompted the downgrade - the higher expected revenue next quarter is not important in comparison.
  • Reply 13 of 23
    mactelmactel Posts: 1,275member
    I bought one of those little 2G shuffle though Nov 7 is the delivery date. That should add to the pile.



    One thing I notice more and more are people with the Borg implanted bluetooth headsets. I just often feel the urge to rip the sucker out of their ears. Though it would be cool if the 3G shuffle was just an ear piece like that, and of course with a second ear phone. Nah, I'd want to rip that out of peoples' ears too.
  • Reply 14 of 23
    Quote:
    Originally Posted by MacTel


    I bought one of those little 2G shuffle though Nov 7 is the delivery date. That should add to the pile.



    One thing I notice more and more are people with the Borg implanted bluetooth headsets. I just often feel the urge to rip the sucker out of their ears. Though it would be cool if the 3G shuffle was just an ear piece like that, and of course with a second ear phone. Nah, I'd want to rip that out of peoples' ears too.



    Apple could easily make a shuffle that small, the main problem would be the need for an additional device to control it.



    I totally agree with you about the Borg people though, This past Easter Sunday, there was a guy directly in front of me in church with the Bluetooth headset in his ear during the whole mass, blinking its stupid, distracting blue light every 5 seconds. I mean is he actually going to answer the phone if it rings? If not, he can't spend the requisite 2 seconds to remove it and leave it in his car and relax for at least one hour on a Holiday Sunday?
  • Reply 15 of 23
    Quote:
    Originally Posted by g3pro


    Wow, you have no idea of how market forecasts work.



    Actually I have a very good idea of how market forecasts work. Which is why I also feel that it is better to rely on my own judgment than make decisions based on their recommendations. This whole report was nothing but common sense observations made based on information which is available to almost everyone. This is information which is largely based as SpamSandwich stated "on unfounded rumors, hearsay, conjecture and speculation." The fact that he is raising his targets for revenue, unit volume and share price while lowering his recommendation is in itself at least somewhat contridictory. I understand completely the time frames involved, but I also understand that he would love to knock the stock down to $71 so that 'someone' could pick up shares then change his rec to buy and look like a genius when it hits the $85 target within 12 months.



    I have been active in the market for over ten years through all the hype of the bubble market and have found these professional market forecasts to be completely unreliable and often idiotic. I watched as they rated any dogshit stock with ".com" in the name as a strong buy as losses continued to grow every quarter with no viable plans for turning it around and making a profit. They then cut their ratings only when it was blindingly clear that the companies were going out of business. I ignored their rantings and focused on my own long term strategy and came out unscathed.



    Also, I have recognized bottoms in this stock on a consistent basis both in my own trading and on this message board at the same time when these so called 'professionals' were cutting recommendations and issuing 'warnings". I am holding this stock long term and am sitting on a very comfortable profit with a total average cost basis of 35.59 per share (the cost basis went up when I picked up a bunch more shares in the 50's), so I am not very concerned with short term fluctuations. I continue to be very optimistic about this stock, there are many more opportunities for growth ahead.



    Quote:
    Originally Posted by MacCentric


    07-12-2006, 05:14 PM \t #5

    MacCentric

    Registered User



    Join Date: Apr 2005

    Posts: 77

    \t

    This is the analysts making themselves a nice buying opportunity before Apple blows away estimates next Wednesday. I think this may be the lowest you will ever be able to get Apple stock. This will give those analysts involved good bonuses when the stock reaches 90 after their company picked up large blocks at 53.



    They beat estimates by over 20% and the stock rocketed up from there.
  • Reply 16 of 23
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by MacCentric


    Nothing but a ruse to get the share price down to allow for one last accumulation of shares before the earnings reports come out.





    Maybe. It's tough to do though. More often than not, I see stock price drop after a good Apple announcement.
  • Reply 17 of 23
    Quote:
    Originally Posted by MacTel


    I bought one of those little 2G shuffle though Nov 7 is the delivery date. That should add to the pile.



    One thing I notice more and more are people with the Borg implanted bluetooth headsets. I just often feel the urge to rip the sucker out of their ears. Though it would be cool if the 3G shuffle was just an ear piece like that, and of course with a second ear phone. Nah, I'd want to rip that out of peoples' ears too.



    Which reminds me that not only will Apple make a mint on the cell phone(s) (when they are realeased) but they will also make a killing on accessories.

    When Apple comes out with a phone, you know there is going to be an amazing bluetooth headset to go with it and don't forget the fine Italian leather case and car charger.
  • Reply 18 of 23
    Quote:
    Originally Posted by mr O


    I'd be surprised if Apple is going to release a Phone.



    They'd rather make the video iPod iChat ready so one could communicate from his video iPod with people using Macbooks etc. An iPod with build in iSight would therefore make all the other existing music Phones obsolete.



    So, forget about the current phone companies. Speech should be free and Apple has the software to do so!



    but you'd need wifi on it... and Wu said wifi makes mp3 players cry.
  • Reply 19 of 23
    Quote:
    Originally Posted by MacTel


    I bought one of those little 2G shuffle though Nov 7 is the delivery date. That should add to the pile.



    One thing I notice more and more are people with the Borg implanted bluetooth headsets. I just often feel the urge to rip the sucker out of their ears. Though it would be cool if the 3G shuffle was just an ear piece like that, and of course with a second ear phone. Nah, I'd want to rip that out of peoples' ears too.



    i am one of them, please don't rip mine off! honestly, those things are awesome. you don't even have to touch your phone. just keep it nearby and talk. i feel like it doesn't belong to this time. looks like a back to the future part II toy.
  • Reply 20 of 23
    Quote:
    Originally Posted by MacCentric


    Nothing but a ruse to get the share price down to allow for one last accumulation of shares before the earnings reports come out.



    Exactly what it is.



    What sane person would listen to these people and their ratings?
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