China iPhone launch a 'disappointment'
Analysts adjust their Chinese iPhone estimates following sales that one describes as "soft"
iPhone buyers in Guangzhou. Photo: iPhonAsia
Following press reports that China Unicom (CHU) only managed to sign up 5,000 new iPhone subscribers after four days of sales, Piper Jaffray's Gene Munster and Barclays Capital's Ben Reitzes each issued notes to clients Tuesday that tried to put a positive spin on the news.
"The China launch is a disappointment," Munster acknowledged. But he added that it reminded him of the launch of the original iPhone in June 2007, when reports that AT&T had activated only 146,000 iPhones in two days caused "unfounded concerns among investors" about the device's long-term potential.
Retail data show Mac sales up 13%
Photo: Apple Inc.
Several analysts waited until Monday morning — the same day Apple (AAPL) is scheduled to release its quarterly earnings report — to send clients their estimates of the company's unit sales (see here). But Piper Jaffray's Gene Munster waited longest of all.
Munster released a note at 1:54 p.m. Eastern — about two and a half hours before Apple's results are due to hit the wires — with his latest estimates for Mac and iPod sales.
He was waiting for data from the NPD Group, which surveys U.S. retail outlets and reports sales of a variety of goods — including electronics — on a monthly basis.
According to Munster, NPD data for the past three months show domestic Mac sales up 13% year over year, which implies unit sales of 2.85 million to 2.9 million. Factoring in international markets, however, Munster suggests that total Mac sales probably grew somewhere between 9% and 11% year to year — roughly double the 5% growth the Street is expecting.
The news for iPods was not quite so encouraging.
A guide to Apple's guidance
How to make sense of the forward-looking statements in next week's earnings report
If history is any guide, traders will reward or punish Apple's (AAPL) shares in after-hours trading Monday based not on the quarterly earnings it reports, but on what the company says about the quarter to come — which will almost certainly be disappointing.
You would think by now that Wall Street had figured out that Apple guides conservatively — which is to say, it low-balls its earnings and revenue numbers for the coming quarter so that it can blow them out of the water three months later.
But in case it hasn't, Piper Jaffray's Gene Munster on Thursday issued his quarterly guide to Apple's guidance, in which he tries to predict — based on past performance — precisely how much below (or in rare cases, above) the Street's expectations we can expect Apple's predictions to fall.
The charts on which he bases his estimates are pasted below the fold. Bottom line: Munster expects "a typical Apple guide," with the mid-point of its December earnings-per-share guidance around $1.68 (12% below the Street's $1.91 consensus) on revenues of $10.98 billion (4% below the Street's $11.44 billion).
Below: Munster’s spreadsheets for the past 13 quarters of earnings and revenue guidance.
Apple's 2009 earnings up nearly 44% under new accounting rules – analyst
How much will Apple's (AAPL) reported earnings be affected by the new accounting rules approved Wednesday?
A lot, says Piper Jaffray's Gene Munster.
In a note to clients issued early Thursday, Munster offered his estimated earnings per share under the new and old rules for fiscal years 2009 (which ends in two days) and 2010:
- 2009 EPS: $8.21, up from $5.71Â — a 43.8% increase
- 2010 EPS: $8.90, up from $6.00Â — a 48% increase
Apple wouldn't be required to switch to the new accounting method until Dec. 2010, but Munster expects the company will start as soon as possible, probably with the new fiscal year that begins next week.
"While this has been expected for the last month, we believe this will be a positive for shares of AAPL," he wrote, before raising his price target to $235 from $186.
Of course it's possible that the impact of the rule changes have already been factored into Apple's share price. The stock closed Wednesday at $185.50, having soared 137% over the past eight months. The stock is up more than 10% since Aug. 31, when Munster first reported that the Financial Accounting Standards Board (FASB) task force was considering the rule changes.
What are the new accounting rules? Munster does a pretty good job of explaining them:
Munster: Steve Jobs will host next week's Apple special event
Steve Jobs, Oct. 2008. Photo: Apple Inc.
Apple hasn't confirmed it — and not every analyst agrees — but Piper Jaffray's Gene Munster seems pretty certain that Steve Jobs himself will introduce a new line of iPods next week.
In a note to clients Tuesday morning, Munster describes the substance of Apple's (AAPL) special music event — scheduled for Wednesday, Sept. 9 — as a "non-event" from Wall Street's point of view.
Investors, Munster says, are not likely to be impressed with new iPod nanos, iPod classic and iPod touches re-designed with cameras because "as iPod growth slows … the segment becomes less of an investable theme." (That may be true of the classic and the nanos, but sales of iPod touches grew 130% last quarter year over year.)
Jobs' return, however, is likely to be greeted by the Street as "a slight positive" for Apple's shares — "the first public confirmation of Jobs' health since his return to the company," according to Munster.
Jobs last appearance at an Apple event was on Oct. 14, 2008, when he introduced the unibody MacBooks. In January he took a medical leave to replace his failing liver.
Other possible announcements next Wednesday, according to Munster:
Snow Leopard: Apple's $66 million OS
Photo: Apple Inc.
As expected, the latest update to Apple's (AAPL) flagship Macintosh operating system — Mac OS X Snow Leopard — is going on sale Aug. 28 for the previously announced price of $29. (Press release here.)
Piper Jaffray's Gene Munster has done some quick back-of-the-envelope calculations and concluded Apple is in it less for the money than for the strategic advantage it hopes to gain over Microsoft's (MSFT) Windows 7, schedule to ship in October.
According to Munster, Apple is likely to sell 5 million copies of Mac OS X v10.6 in the remaining month of its fiscal fourth quarter for an average selling price of of $22 — less than $29 and more than the $9.95 Up-to-Date price Apple has offered customers who bought MacBook Pros after June 8.
At 60% gross margin, that comes out to $66 million, or $.05 per share — a bump that Munster believes has already been baked into the Street's Q4 estimates.
So what's really going on here, he asks rhetorically?
Munster: An Apple TV set by 2011
Gene Munster has seen the future of television and it has an Apple (AAPL) logo on it.
In a note to clients Thursday, Piper Jaffray's senior analyst offered a scenario by which Apple would enter the cut-throat TV market by 2011 with an Apple-branded television set with digital video recording and home media functions (music, movies, games, interactive TV) built-in.
"Yes, TV hardware is a challenging business if you don't change the rules of the game," Munster writes, "but we see potential for Apple to offer best-in-class software and hardware and charge a premium."
The roadmap to Apple television (as opposed to Apple TV), as Munster sees it:
Sacconaghi: How Apple sells 50 million iPhones in 2011
Apple Inc.
Piper Jaffray's Gene Munster — an Apple optimist — took a lot of heat when he predicted two years ago that Apple (AAPL) would sell 45 million iPhones in 2009. Unfortunately for him, the deal he expected Apple to strike in China still hasn't materialized, and he's since cut his 2009 expectations back to 25 million.
Now comes Bernstein Research's Toni Sacconaghi — usually considered an Apple pessimist — with a report that has Apple selling at least 50 million iPhones a year by 2011, up from the 20 million he's modeling for this year.
How does Sacconaghi expect Apple to get from 20 million to 50 million?
In three steps:
Munster: Apple on track to sell 2.7 million Macs in Q4
MacBook Pro. Source: Apple Inc.
Based on U.S. retail sales data released Monday afternoon by the NPD Group, Apple (AAPL) is on track to sell 2.7 to 2.8 million Macs and 9.5 to 10.5 million iPods in its fourth fiscal quarter, according to Piper Jaffray analyst Gene Munster.
Mac unit sales came in up 2% year over year in July, which according to Munster implies 3% to 7% growth for the quarter that ends in September — roughly in line with the Street's expectation of 5%.
"With just one month of data," writes Munster, "it is way too early to make a call on the quarter given ~50% of Mac sales in the quarter typically happen in the month of Sept."
He adds that international sales are growing faster than domestic for both Macs and iPods, which is why he expects reported sales to be slightly higher than NPD's numbers would suggest. He also notes that July 2008 was a particularly good month for the Mac, with unit sales up 43% over July '07, so achieving 2% growth over that is no mean feat. The next two months should be easier in terms of showing year-over-year growth.
Things aren't looking quite so rosy for the iPod.
Apple's $1.2 billion tablet computer
Apple's next gadget? Image: Piper Jaffray
Piper Jaffray senior analyst Gene Munster took another crack at the Apple (AAPL) tablet computer he's been writing about for months, issuing a report to clients Friday that included some back-of-the-envelope sales estimates and a computer-generated rendering of what he thinks it will look like.
"Last week we spoke with an Asian component supplier that has received orders from Apple for a touch-screen device to be fulfilled by late [calendar year] 09," he writes. "This data point underscores our thesis that a tablet will likely launch in early [2010]."
The device, as he sees it, will…
