Fourth quarter Mac revenues to exceed $2 billion - analyst
Merrill Lynch's Richard Farmer is the latest Wall Street analyst to tweak his expectations for Apple's fiscal fourth quarter to reflect lower iPod digital music player sales and slightly higher Mac sales.
In a research note released Friday, Farmer increased his revenue estimate for the company's fourth quarter from $4.57 to $4.66 billion and his earnings-per-share (EPS) estimate from $0.48 to $0.51.
"The changes are emblematic of what a broader thematic shift in the story away from iPods toward an emphasis on Macs and 2007 new product cycles," he told clients.
After reviewing some preliminary NPD data through the month of September, the analyst lowered his iPod unit sales estimate from 8.3 million units (up 28 percent yearly) to 7.7 million (up 20 percent yearly). However, he raised his estimate for average selling prices (ASPs) of the players for the quarter to be $184, from $177, to "better reflect unit mix from NPD."
"Due to new pricing from Apple heading into the holiday season we now expect ASPs to decline by 6 percent sequentially [during the first fiscal quarter of 2007]," Farmer said.
Offsetting slower iPod sales, according to the analyst, are slightly higher Mac sales due to "better than expected demand for new Mac Books." He now expects the Cupertino, Calif.-based company to report sales of 1.51 million systems (up 22 percent yearly) during its fourth fiscal quarter compared to his previous estimate of 1.44 million estimate (up 16 percent yearly).
Farmer, who maintains a "Buy" rating on shares of Apple, expects the company's Mac revenues to account for $2.025 billion for the quarter.
In a research note released Friday, Farmer increased his revenue estimate for the company's fourth quarter from $4.57 to $4.66 billion and his earnings-per-share (EPS) estimate from $0.48 to $0.51.
"The changes are emblematic of what a broader thematic shift in the story away from iPods toward an emphasis on Macs and 2007 new product cycles," he told clients.
After reviewing some preliminary NPD data through the month of September, the analyst lowered his iPod unit sales estimate from 8.3 million units (up 28 percent yearly) to 7.7 million (up 20 percent yearly). However, he raised his estimate for average selling prices (ASPs) of the players for the quarter to be $184, from $177, to "better reflect unit mix from NPD."
"Due to new pricing from Apple heading into the holiday season we now expect ASPs to decline by 6 percent sequentially [during the first fiscal quarter of 2007]," Farmer said.
Offsetting slower iPod sales, according to the analyst, are slightly higher Mac sales due to "better than expected demand for new Mac Books." He now expects the Cupertino, Calif.-based company to report sales of 1.51 million systems (up 22 percent yearly) during its fourth fiscal quarter compared to his previous estimate of 1.44 million estimate (up 16 percent yearly).
Farmer, who maintains a "Buy" rating on shares of Apple, expects the company's Mac revenues to account for $2.025 billion for the quarter.
Comments
1st post
Hello from Seattle.
Buy! Buy! Buy!
1st post
Hello from Seattle.
I already did did did 8)
Hello Seattle, from Ireland.
Microsoft has brainwashed two of us already...
Oh deary me...
Microsoft has brainwashed two of us already...
Did they touch you in multiple places?
Did they touch you in multiple places?
lol
$2 billion in revenue and still underperforming. Most US companies would be happy to do so poorly.
So my question is, how fast does Apple need to make money before the analysts are satisfied? ... $2 billion in revenue and still underperforming. Most US companies would be happy to do so poorly.
They're not touching enough people and squirting enough people, unlike Microsoft.
So my question is, how fast does Apple need to make money before the analysts are satisfied? ...$2 billion in revenue and still underperforming. Most US companies would be happy to do so poorly.
Note that the $2 billion is on MAC SALES alone. Total revenue will probably go up to $4.8 billion dollars. The proportion of revenue of MAC SALES is quite promising, of strong Intel-transitioned machines like the MacBooks flying off the shelves so fast you're getting MacBooks with the shelves themselves... Factor in the profit margin of that $2 billion which is much higher than the rest of the $4.8 billion (iPod, iTMS, software, etc.), I predict:
2nd or 3rd best quarter ever in terms of both total revenue and total profits.
So my question is, how fast does Apple need to make money before the analysts are satisfied?
$2 billion in revenue and still underperforming. Most US companies would be happy to do so poorly.
That's not the relevant question. Analyst are only concerned about stock price. If apple made the same amount of money each year, their stock price would remain the same or even decrease (since presumably, their competitors would be increasing sales). It doesn't matter if it's two billion or 20 billion. The rate of growth is what drives a stock. No one has ever said apple is in bad or terrible fniancial shape. This analyst has to give a buy, neutral or sell rating to apple stock. If the stock is not growing fast enough, he cannot give a buy rating now can he?. What does it matter if the total sum is 4 billion or which company would like to have that money?.. Regardless, this analyst maintained a buy rating which implies he thinks apple stock will increase.
In case you think this is trivial, I bought apple stock about 10 months ago. I am losing money. It's nice apple is making 4 billion or whatever the figure is.. how does that help the stock price?.
That's not the relevant question. Analyst are only concerned about stock price. If apple made the same amount of money each year, their stock price would remain the same or even decrease (since presumably, their competitors would be increasing sales). It doesn't matter if it's two billion or 20 billion. The rate of growth is what drives a stock. No one has ever said apple is in bad or terrible fniancial shape. This analyst has to give a buy, neutral or sell rating to apple stock. If the stock is not growing fast enough, he cannot give a buy rating now can he?. What does it matter if the total sum is 4 billion or which company would like to have that money?.. Regardless, this analyst maintained a buy rating which implies he thinks apple stock will increase.
In case you think this is trivial, I bought apple stock about 10 months ago. I am losing money. It's nice apple is making 4 billion or whatever the figure is.. how does that help the stock price?.
Yeah, that's the "game" - are you investing in a growth stock? or something that pays dividends?
With the stocks that pay dividends it's a bit easier because you are in it to say get a 3% per year return and maybe on top of that if the stock goes up then you are maybe getting annually something like 5%.
But when you are chasing growth stocks that don't pay dividends, you are looking for the stock price to go generally up like 10% on average per year.
AAPL has performed very well. Analysts *want* to push it to $80 and $90 with whatever techniques they have at their disposal to influence the market because they are sitting on huge amounts, like some lucky AAPL shareholders, that got in on $20, $40, $50 ...
Apple has to show growth. Market share growth is nice but not a biggie as long as it holds the fort and does not dip below 3% US. Revenue growth is nice because it means that there is a healthy cash flow which is increasing. Next, *profit growth* -- Also nice because it means more innovative products, better margins, etc. etc. they are actually making more and more money, etc.
My armchair analysis at this tender age of 28 is this :: people are sitting back and wondering what's next. AAPL at $75 as I speak is trading at its highest ever.
People are going, cool, great Macs, nice OS, cool iPods, hey, there's a new Red one, but what more? What possibly more can Apple do? The scary part is, even die hard Apple fans have no reasonable answers. iPhone, iTV, iPDA ..... then what?
The thing is AAPL is a healthy nice company with growing revenues and profits and a stellar 5 year history of innovative, great products and have defied the IT sector in general. But what more can there be? What more?
Y'all come up with good answers that shareholders and potential shareholders will believe
and that will be your answer as to *what* will push AAPL past $80 and past $90.
The thing is... Apple has done so well so far. What more can they do? They solved the dragging CPU debacle in one year. Superb. They continue to hold the fort on iPod dominance. Now is the time for.... the next stage. 2007. Growth. Increase in stock price. One more thing... One more thing, a bold, ambitious, overarching strategy that will see AAPL kick ass through to the end of this decade. What will it be? iSteve knows. Do you?
I absolutely agree. Microsoft can try and touch us in multiple places and make us squirt (this is the last time squirt shud b mentioned on these forums
Apples next move is what I've been waiting for. I haven't bought an iPod yet because I'm holding off for the next phase of their strategy. I want video and basic computer functionality. Touch screen and magnetic controls are welcome too...
So my question is, how fast does Apple need to make money before the analysts are satisfied?
$2 billion in revenue and still underperforming. Most US companies would be happy to do so poorly.
I believe it was the founder of Sony that said it. Why would you invest in any company if you could grow the value of your investment faster somewhere else. As a result the company was always looking for growth.
And there in lies the crux of the problem for companies and their need to constantly grow. I can very easily get 6% returns on money so for a stock to maintain its value I would need at least 6% growth from the company. No growth from a company means I am actually losing money. Now dividends offset that a bit but even high dividend companies still need to grow.