TMO Reports - More Analysts Weigh in on Apple's Wed. Earnings Call

by , 1:05 PM EDT, July 17th, 2006

Piper Jaffray analyst Gene Munster and American Technology Research analyst Shaw Wu on Monday gave their thoughts on Apple's upcoming earnings call, which will happen after the markets close on Wednesday, July 19. Both of them expect the company's revenue for the previous fiscal quarter to be at the upper end of Wall Street's consensus estimate of US$4.2 to $4.4 billion, with $0.44 EPS.

Mr. Munster sees Apple announcing iPod sales of 7.7 to 8.2 million units, below the Wall Street consensus estimate of 8.3 million. He also sees 1.23 million Macs sold, compared to the consensus of 1.25 million. In addition, the analyst expects Apple will continue with its tradition of providing conservative guidance for the current quarter, which right now stands at $4.95 billion in revenue and $0.52 EPS, according to Wall Street estimates.

"iPod timing has been a point of significant Street interest over the last two weeks," Mr. Munster wrote. "We do believe Apple is working to release a new/refreshed iPod in the September quarter. If we are wrong, Apple will miss some back-to-school benefit, but ultimately, we are confident the company will not miss the critical pre-holiday window."

However, he added, "we believe the more critical component in the quarter will be Mac market share. if new/refreshed iPods are not slated to be released in the quarter, we believe starting in the September quarter investors will start to place increasing emphasis on changes in Mac market share, given the Intel transition will likely be complete. If Mac market share grows in the September quarter, we expect the Street will look past a potential delay in new iPods."

Mr. Wu expects Apple to report 8.3 million iPods and 1.2 million Macs sold during the previous quarter. He sees $4.6 billion in revenue and $0.48 EPS for the current quarter, "helped by back-to-school but offset by weaker European seasonality," and much lower than consensus estimates that he thinks are "unreasonably aggressive." He thinks Apple will ship a revised iPod nano in October, "or late September at the earliest."

He concluded: "We have noticed that AAPL shares tend to be overbought or oversold. With the stock now trading at 20x our CY07 EPS (16x excluding net cash), we believe there is an over-discounting of AAPL's fundamentals and growth prospects that remain among the strongest in large-cap technology." The analyst reiterated his "Buy" rating on the stock, while Mr. Munster also reaffirmed his "Outperform" rating, with a $99 price target.

At 12:45 PM EST on Monday, Apple shares were selling for $52.86, up $2.19, or 4.32%, for the day. Apple's stock is well off the $86.40 52-week high it achieved in January.

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