Analyst: Macintosh is Recession Proof
Analyst: Macintosh is Recession Proof
by , 10:45 AM EDT, March 20th, 2008
The U.S. is either in a recession or on its way, depending on who you talk with, but Apple's Macintosh computer appears ready to hold its own and weather the economic downturn. American Technology Research analyst Shaw Wu expects that Apple's March quarter will prove that with Mac sales up about 40 percent year over year.
"So far, our sense is that the Mac business appears to be recession proof. We were already looking for robust Mac unit growth of 38 percent year over year, but now we think it may be closer to 42 percent," Mr. Wu said. "MacBook Air sales, which saw a little bit of a lull after a strong start, have picked up rapidly. Customers are attracted to its super thin form factor and do not seem to mind some of its limitations."
He added that the MacBook Air could account for at least 20 percent, and even as much as 25 percent, of the portable Mac sales for the March quarter.
Gross margins for the quarter may come in above Apple's 32 precent guidance, too. Thanks to favorable NAND flash, DRAM, and hard disk prices, Apple could report a 33.5 percent margin, coming in above Mr. Wu's 32.5 percent estimate as well.
Quarterly iPod sales are likely to be strong coming in between 9.5 and 10 million units. iPhone sales appear to be going through a slight pause, however, while consumers await the release of iPhone Software Update 2.0 in June. Despite the temporary lull, Mr. Wu expects Apple will still hit its 10 million unit mark before the end of 2008, and will likely make it all the way to 11 million units.
"We believe we will likely see an acceleration in iPhone adoption in the second half of 2008 and beyond with native Exchange support, more carriers, 3G (UMTS/WCDMA) and low-cost models," he said.
Mr. Wu is estimating Apple will report US$7 billion in earnings and $1.10 EPS for the March quarter, up from his earlier $6.9 billion and $1.02 EPS estimate. He is also raising his fiscal 2008 revenue model for Apple from US$31 billion and a $5 EPS up to $31.3 billion and $5.15 EPS.
Mr. Wu is maintaining his "Buy" rating and $175 target price for Apple's stock. Apple is currently trading at $130.74, up 1.07 (0.83%).
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.
Observer Comments
I have liked Shaw Wu's analyses in the past and I think he's spot on this time as well. One exception though. I don't think any company is Recession Proof. More resistant than most, yes. Able to weather a significant downturn better than a company without the reserves and assets definitely. However, a bad enough downturn can take out any company.
It sounds a bit too much like the Unsinkable Ship, and we all know what happened to the Titanic. In times like this overconfidence is risky.
Look at recent history to see a good example. When the dot com crash happened, all the other computer businesses pulled back, cut losses, slashed R&D, fired their most creative people so they could hire more drones, and gave their top execs obscene amounts of money as bonuses for making all these wise, prudent cuts to save pennies while weathering the financial storms.
Apple, on the other hand, _increased_ R&D and innovated at a time when most "analysts" viewed innovation as certain death. I see the same thing happening today. Other tech companies are focusing on cheap crap and are scared to death to try anything new or different (just look at the lame responses to the iPhone) while Apple is playing the mad scientist of the tech industry, coming out with monsters like the iTouch, the iPhone SDK, and who knows what else.
Just wish I had more money to buy more Apple stock while it's this low ![]()
Comments are currently closed. Please email the author instead.
Recent Headlines - Updated March 20th
- Fri, 5:55 PM
- Games - Namco Releases Match-Three Game Tinseltown Dreams to the App Store
- 5:16 PM
- News - iPad Launch Day Deadline for Developers: March 27
- 5:11 PM
- News - Steve Jobs Helps Promote Organ Donor Legislation
- 4:06 PM
- iPad - VIVmag Shows Off Interactive iPad Version in the Works
- 3:07 PM
- App Store - Microsoft Yanks Bing App From Foreign App Stores
- 2:05 PM
- iObserver - Analysts Downgrade Troubled Palm Amid Severe Revenue Drop
- 1:35 PM
- In-Depth Review - PhoneSuite MiLi Packs a Powerful Punch
- 1:11 PM
- News - YouTube to Viacom: Sue Yourself
- 11:34 AM
- Product News - PocketMac for BlackBerry 5 Improves Snow Leopard Support
- 10:59 AM
- News - Apple iGroups Patent Hints at Social Networking Plans
- 10:20 AM
- Hot Forum Topic - Reader Discussion: Who Will Buy Palm?
- 9:50 AM
- News - Bharti Airtel Lands India iPhone 3GS Deal
The Mac Observer Reader Specials
- TypeStyler For Mac OS X is Now Shipping! Download The Free Fully Functional 60 Day Tryout at www.typestyler.com
Mac Memory and Hard Drives: MacBook Pro Memory 8GB kits $349.99! iMac Memory 4GB DDR Kits for $109.99! Mac Pro Memory 4GB Kits for $135.99! Mac Hard Drives 1.5TB Seagate SATA II for $147.99! Click Here!
- CarMD Handheld Device & Mac/PC Software System saves you time and money on car maintenance and repair. Buy at www.CarMD.com! Save $10 with code TMO2.
If you're using a Mac, then you've gotta check out Full Tilt Poker for Mac. This Full Tilt Poker bonus code does the unthinkable, it actually rewards!For the latest Apple products use Ciao, a price comparison website, to find laptops like MacBook Air. Then find the best prices on MP3 players and use our comparison tool to evaluate mobile phones like the Apple iPhone.

