Appleis March quarter will likely show strong Mac sales, but iPhone sales may come in weaker than analysts would like, according to American Technology Research analyst Shaw Wu. Mac sales may, in fact, come in above analyst estimates spurred in part by the new MacBook Air.

Mr. Wu said that the quarteris Mac sales "appear to be the most promising with continued momentum carried over from previous quarters." He added "While MacBook Air sales look somewhat underwhelming, it is helping drive more traffic. We remain comfortable with our forecast of 2.1 million Macs versus consensus of about two million."

iPhone sales, however, appear to be weaker than expected based on AT&T subscriptions.

"We are not sure if looking at AT&T additions is the right way to measure sales as we believe the hacked iPhone market is much larger than expected," Mr. Wu said. "Our sources indicate that iPhone is being used in about 35 to 40 countries versus the four authorized countries. Out of the four million iPhones shipped, we estimate at least one million, and perhaps as high as 1.5 million may be hacked."

Even if the quarteris iPhone sales come in below expectations, it will likely have little impact on Appleis bottom line. With its 3 percent contribution to the companyis bottom line, selling zero iPhones for the quarter would result in only a 3 cent negative impact on EPS.

Mr. Wu is modeling 2.1 million iPhones sold for the quarter, down 9 percent compared to last quarter. The market consensus for iPhone sales is sitting at 1.85 million.

Mr. Wu expects Apple will report between 9.5 and 10 million iPods sold in the March quarter, well below the market consensus of 11 to 12 million units. "We do not think the overly optimistic have factored enough of a seasonal decline and overestimated low-end shuffle demand," he said.

Overall he sees Apple tracking above its $6.8 billion guidance and $0.94 EPS for the quarter at $6.9 billion and $1.02 EPS.

Mr. Wu is maintaining his "Buy" rating and $175 target price for Appleis stock. Apple is currently trading at 127.18, up 2.32 (1.86%).

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