TMO Reports - Analyst: 'Boot Camp May Accelerate Mac Market Share Gains' [UPDATED]

by , 11:30 AM EDT, April 5th, 2006

Analysts with Piper Jaffray, UBS, and American Technology Research on Wednesday weighed in with positive reactions to Apple's release of a Beta version of Boot Camp, which enables the owners of Intel Macs to run Windows XP on their computers.

Piper Jaffray analyst Gene Munster said in his brief research note: "We believe Apple will gain share in the PC market in CY06 and Boot Camp may serve to accelerate these market share gains."

In reaction to the news, Mr. Munster said: "Many potential first time Mac users have been reluctant to make the move to Mac hardware, given the tie to the Mac OS. While the Mac OS is highly compatible with applications, the potential for an issue has led many buyers to stay with a Windows based PC. We believe Boot Camp erases this hurdle and will lead to continued market share gains for Macs in 2H CY06."

UBS analyst Ben Reitzes agreed, noting: "With 'Boot Camp' on Leopard, we believe AAPL could benefit from a significant OS upgrade cycle starting in its December quarter." He estimated that, as a result, Apple could see unit sales growth of 29% year-over-year (compared to the prior-year quarter) to 1.6 million during its first quarter of fiscal year 2007, and 29% growth during fiscal year 2007 to 6 million units sold. (Apple's 2007 fiscal year begins Oct. 1.)

Mr. Munster expects that just a point of market share gain for Apple will add around 15% to the company's EPS (earnings per share) during calendar year 2006. (Or, through Dec. 31, which is the end of the first quarter of Apple's 2007 fiscal year. Like many companies, Apple's fiscal year is different from the calendar year.)

Mr. Munster retained his "Outperform" rating on Apple's stock, with a US$103 price target. American Technology Research analyst Shaw Wu, saying that he thinks today's news "is Apple's 30th anniversary surprise," also reiterated his "Buy" rating on the stock in reaction to the Boot Camp Beta release. Mr. Reitzes reaffirmed his "Buy-2" rating on the stock.

While Mr. Wu didn't offer any thoughts on market share gains, he did say that Boot Camp "potentially could be a significant game changer. We believe a key reason why Apple has not gotten more 'switchers' is lack of strong Windows compatibility," he wrote. He added that he expects Windows Vista to also be supported on a Mac.

As The Mac Observer noted earlier this morning, Apple's shares were up significantly on the news. At 2:30 PM EST on Wednesday, they were up 8.47%, or $5.18, to $66.35. TMO will update readers on Apple's stock price at the close of trading, or if it makes another significant leap during the day.

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2:47 PM EST, 4/5/06: Updated article with comments from Ben Reitzes and new information on Apple's stock price.