Shaw Wu: Apple's Optimistic Guidance is Conservative

by , 12:30 PM EST, December 4th, 2007

Many analysts were surprised by Apple's optimistic guidance for the December quarter following the company's previous eight quarters slant towards conservative. That outlook, however, may have been conservative after all if sales prove to be as strong as American Technology Research analyst Shaw Wu expects.

iPod sales appear to be above expectations and may hit 25 million units, and iPhone sales appear to be on target or slightly below target at 2.1 million. "Our sources indicate that iPod sales are tracking ahead of expectations with an acceleration in 'fat boy' nanos and iPod touch more than offsetting slower growth in iPod shuffle and iPod classic," Mr. Wu said. "As a result, we are raising our iPod unit forecast to 25 million from 24 million versus the consensus of about 23.2 million."

Mac sales look to be inline with Mr. Wu's projection of 2.3 million units driven by switchers and the release of Mac OS X 10.5.

While the Mac and iPod appear to be moving forward with strong momentum, Mr. Wu is concerned that iPhone sales may not be able to keep up the pace without some changes. "It appears Europe's ramp is less robust than expected due to high pricing and customer service snags offset by better than expected strength in the USA. We believe AAPL may need to cut iPhone prices to accelerate sales," he said.

He added "While we remain concerned with potential softness in US consumer spending, it appears that AAPL is once again positioned to buck the trend."

Mr. Wu maintaining his "Buy" rating for Apple's stock with a target price of US$210. Apple is currently trading at $179.68, up 0.82 (0.46%).

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