Apple Inc. surprised analysts and investors with the numbers it reported during its first quarter financial report on Tuesday. American Technology Research analyst Shaw Wu shared what he considered to be the big six surprises:
- Apple reported US$7.1 billion in revenue and $1.14 in EPS, all-time record highs and well above raised views of $6.4 billion and $0.78 and its guidance of $6-6.2 billion and $0.70-0.73
- 21.1 million iPods shipped versus market expectations of 15-16 million.
- Gross margin upside of 31.2 percent versus expectations of about 28.5 percent.
- Mac shipments of 1.61 million, below consensus thinking of 1.75-1.8 million units.
- Mac ASPs, up 9 percent Q/Q to $1,501, the highest level in 8 quarters.
- March quarter guidance is more conservative than expected at $4.8-4.9 billion and $0.54-0.56 versus the consensus at $5.2 billion and $0.60
Mr. Wu commented "We believe the Street got ahead of itself in estimating Mac demand, which remains strong at 28 percent year over year growth."
He also noted that Apple has consistently offered conservative guidance for upcoming quarters, and then performed above those expectations. Mr. Wu is projecting that Apple will report revenue at $5.1 billion and an EPS at $0.60 for the March quarter, down from an earlier $5.2 billion and $0.63 estimate.
For fiscal 2007, he is predicting that Apple will report $23.1 billion in revenue and $2.85 EPS, and $28.2 billion with $3.60 EPS for fiscal 2008. The catalyst for Appleis continued growth stems from what Mr. Wu refers to as Appleis four-prong play: iPod+iTunes, Mac, AppleTV, and the iPhone. Additional catalysts for the next few quarters include the release of Mac OS X 10.5 (Leopard), new movie and carrier partners, lower cost cell phone options, and growth into new business areas.
Mr. Wu is maintaining his "Buy" rating for Apple stock, but is raising his target price to $115. Apple stock is currently trading at $90.82, down 4.12 (4.35%).