Analyst: Macs Should Offset Lower iPod Sales

by , 10:15 AM EDT, June 21st, 2006

UBS Investment Research analyst, Ben Reitzes, expects iPod sales may be lower for the third quarter of 2006, but rising Mac sales should make up the difference. iPod sales should start to climb through the end of the year, and Mac sales are expected to accelerate into 2007. Mr. Reitzes stated "We believe acceptance of new products in terms of Macs and iPods is the key for Apple's shares this year."

Solid educational buying and strong interest in the new consumer-oriented MacBook has Mr. Reitzes raising his estimate for Macs sold in the third quarter from 1.24 million units to 1.32 million. He is also raising his total sales estimate for 2006 from 5 million units to 5.1 million.

Mr. Reitzes agrees with other analysts that the Intel-based replacement for the Power Mac G5 will be introduced in August. That's most likely to happen at Apple's World Wide Developer Conference along with the preview of Mac OS X 10.5 (Leopard).

Despite the continued interest in the iPod, sales are down slightly. USB is revising its iPod unit sales to 7.8 million for the third quarter, down from 8.4 million. Total iPod sales for the year are projected at 39.8 million units instead of 40.9 million. New iPod models should help boost sales moving into 2007.

Mr. Reitzes expects Apple to report third quarter revenues of US$4.35 billion with an EPS at $0.42. Total revenue for 2006 should be $19.3 billion with and EPS of $2.03. He is setting his fiscal 2007 revenue estimate at $24 billion and $2.60 EPS.

UBS is maintaining its "Buy" rating for Apple with a target price of $90.

Apple is currently trading at $57.56, up 0.09 (0.16%).

If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.