Anyone have opinions with regards to Mac sales this quarter in light of the Gartner & IDC report just released?  Im going to be writing a few articles here shortly.  One on Mac sales and another on my “final” earnings estimates for this quarter. 

I already have my own opinions and conclusions drawn up, but would like to challenge my way of thinking by hearing what others have to say on the topic. 

Thanks.

Re: Need some opinions on Mac Sales in light of Gartner &

[quote author=“andyzaky”]Anyone have opinions with regards to Mac sales this quarter in light of the Gartner & IDC report just released?  Im going to be writing a few articles here shortly.  One on Mac sales and another on my “final” earnings estimates for this quarter. 

I already have my own opinions and conclusions drawn up, but would like to challenge my way of thinking by hearing what others have to say on the topic. 

Thanks.

No doubt with an estimated 38% YOY gains in domestic unit sales, Apple owns the $1,000+ US retail market. The performance was strong enough to power Apple past Acer into the #3 spot if the preliminary numbers prove accurate. I don’t remember the last time Apple owned that position in domestic sales but I dare say it’s been well over a decade and marks an important milestone in the company’s stunning recovery in the market.

I didn’t see Gartner make any total shipment estimates for Apple, but if domestic shipments were as high as 55% of total shipments, Apple’s on track to ship about 2.545 million units in the quarter. That’s at the high end of my shipment estimates.

Good news ahead of Monday.

International unit sales blew away the domestic unit gains rate, but we don’t know has the strong pace of gains might have been realized in Apple’s overseas markets.

I start with a basic growth rate of 30%, which I judge to be sustainable long term so long as OSX retains its superiority.  For calendar year ‘08 I bump this to 40% due to a combination of iPhone halo and the Vista fiasco.  I then adjust my quarterly estimates based upon 1) macro environment, 2) NPD, Gartner, Changewave, and IDC data, 3) personal observations, 4) information from Apple like the concall for example, 5) Deagol’s spreadsheet, and 6) product cycle data.

So 40% would give us 2.41MM units.  The survey data point higher; inventory replenishments point higher; MBA sales point higher; the iPod Touch promotion points higher (includes personal observations at three university stores); BBY expansion points higher; concall points higher (“The Mac business is on fire”); the U.S. “stimulus” bribes point higher; and of course Deagol and DawnTreader point higher; public school budgets point lower; the U.S. recession points lower.

I net that all out to be modestly positive and make my call 2.48MM.  The biggest risk to this is probably the public school budget item; I don’t have hard data on what percentage of Apple’s 3Q Mac sales usually come from that submarket.  But it is worrisome.

[quote author=“capablanca”]I net that all out to be modestly positive and make my call 2.48MM.  The biggest risk to this is probably the public school budget item; I don’t have hard data on what percentage of Apple’s 3Q Mac sales usually come from that submarket.  But it is worrisome.

I’m not worried about the K-12 space this year. Apple has plenty of momentum and room to grow. Apple’s product mix and approach to the market is vastly different than the competition. Technology is now an education staple.

I see us squarely at the 2.55 million unit number with perhaps just a smidgen of room for on the upside surprise if the company got lucky.

Re: Need some opinions on Mac Sales in light of Gartner &

[quote author=“andyzaky”]Anyone have opinions with regards to Mac sales this quarter in light of the Gartner & IDC report just released?  Im going to be writing a few articles here shortly.  One on Mac sales and another on my “final” earnings estimates for this quarter. 

I already have my own opinions and conclusions drawn up, but would like to challenge my way of thinking by hearing what others have to say on the topic. 

Thanks.

Andy,

I’m encouraged that Apple was able to reestablish itself once again as the #3 USA computer vender a little less than two years after Acer eclipsed Apple through the purchase of Gateway. I’m encouraged that Apple has continued to sustain Mac growth for another year and still see 20% market penetration as a pursuable goal by the end of 2012.

As a trader I expected 30 point year over year Mac growth. As such I think Apple is properly valued at this point but I anticipate the stock to begin to rally into the fall on news (iPod now iPhone sales # and other circumstantial data, back to school numbers, earnings, and so forth) but more so on tech’s traditional cyclical uptrend.

Re: Need some opinions on Mac Sales in light of Gartner &

[quote author=“DawnTreader”][quote author=“andyzaky”]Anyone have opinions with regards to Mac sales this quarter in light of the Gartner & IDC report just released?  Im going to be writing a few articles here shortly.  One on Mac sales and another on my “final” earnings estimates for this quarter. 

I already have my own opinions and conclusions drawn up, but would like to challenge my way of thinking by hearing what others have to say on the topic. 

Thanks.

No doubt with an estimated 38% YOY gains in domestic unit sales, Apple owns the $1,000+ US retail market. The performance was strong enough to power Apple past Acer into the #3 spot if the preliminary numbers prove accurate. I don’t remember the last time Apple owned that position in domestic sales but I dare say it’s been well over a decade and marks an important milestone in the company’s stunning recovery in the market.

I didn’t see Gartner make any total shipment estimates for Apple, but if domestic shipments were as high as 55% of total shipments, Apple’s on track to ship about 2.545 million units in the quarter. That’s at the high end of my shipment estimates.

Good news ahead of Monday.

International unit sales blew away the domestic unit gains rate, but we don’t know has the strong pace of gains might have been realized in Apple’s overseas markets.

Quite intersting.  I came up with exactly 2,540,000 on a 55% domestic sales number.  I have charted almost everything one could chart when it comes to Mac sales and will be publishing that data shortly. 

Here is a table comparing Gartner’s estimates for domestic sales with Apple’s total mac sales in the quarter of prediction:

Listed as:
Gartner
Total Macs
Gartner % of Total Macs

Q3 2008 (pro forma - my prediction)
1,397,000
2,540,000
55%
Q2 2008
1,010,000
2,289,000
44.12%

Q1 2008
1,035,000
2,319,000
44.63%

Q4 2007
1,338,000
2,164,000
61.83%

Q3 2007
1,011,000
1,764,000
57.31%

Q2 2007
741,000
1,517,000
48.85%

Q1 2007
808,000
1,606,000
50.31%

Q4 2006
975,000
1,610,000
60.56%

Q3 2006
N/A
1,327,000
N/A

Last year, domestic sales made up over 57% of total mac sales in Q3.  What I’ve noticed with Apple is that U.S. sales tend to make up a smaller portion of total mac sales in Q1 and Q2 than it does in Q3 and Q4.  This has to do with the fact that the kick off of the back to school shopping season together with the grads & dads promotion tends to help U.S. sales in Q3 and Q4.

Also, if you compare “Retail” + “Americas” with “All other Segments” on Apple’s Unaudited Summary Data, you’ll notice that those two segments, taken together, make up a smaller portion of total mac sales in Q1 and Q2 than they do in Q3 and Q4:

Quarter - Americas + Retail - Total - Americas + Retail as % of Total Mac Sales

Q2 2008 1,342,000 947,000 2,289,000 58.62%
Q1 2008 1,345,000 974,000 2,319,000 58.00%
Q4 2007 1,438,000 726,000 2,164,000 66.45%
Q3 2007 1,154,000 610,000 1,764,000 65.42%
Q2 2007 880,000 637,000 1,517,000 58.01%
Q1 2007 933,000 673,000 1,606,000 58.09%
Q4 2006 1,104,000 506,000 1,610,000 68.57%
Q3 2006 858,000 469,000 1,327,000 64.60%
Q2 2006 648,000 464,000 1,112,000 58.27%
Q1 2006 708,000 546,000 1,254,000 56.46%

Notice how the “Americas + Retail” segments generally make up about 58% of Q1 and Q2 sales over the past 3 years, while making up about 65%+ in Q3 and Q4.  This data tends to show that U.S. sales generally make up a larger portion of total Mac sales in Q3 and Q4 than it does in Q1 and Q2. 

The reason I’m using 55% for total domestic sales for Q3 is due to a possible slowdown in U.S. consumer spending which might slightly affect Mac sales. 

Whatever the case may be, Mac sales seem like to fall in the range of 2,450,000 - 2,650,000.  There’s no way to tell how well the rest of the world is doing with regards to Mac sales.  The historical data shows “All other segments” growing at a consistent basis with very minor pullbacks during Q2 and Q3. 

We’re almost there.  I’m definitely going to be revising my estimates to 2.540 million macs.

According to article below, mac shipments as % of worldwide shipments were 3.3%.

http://news.cnet.com/8301-13860_3-9992688-56.html?part=rss&subj=news&tag=2547-1_3-0-5

“Worldwide shipments fared better, up 16 percent for the quarter, and of course Apple’s worldwide share is far lower than its domestic one. Despite Apple’s U.S. gains, its worldwide market share was 3.3 percent in the second quarter, according to IDC.”

According to article below, total worldwide shipments were 71.9 million.
http://www.appleinsider.com/articles/08/07/16/apple_passes_acer_to_become_third_largest_u_s_pc_vendor.html
“Overall, global PC shipments reached 71.9 million units in the second quarter of 2008, a 16 percent increase year-over-year.”

3.3% of 71.9 million equals 2.4 million mac shipments.

Is the number perhaps higher due to Apple store retail sales???

Andy,

Looks like Ben is the perfect huckleberry for you to interact with.

http://seekingalpha.com/article/85376-why-i-m-shorting-apple-ahead-of-earnings?source=feed

[quote author=“DawnTreader”][quote author=“capablanca”]I net that all out to be modestly positive and make my call 2.48MM.  The biggest risk to this is probably the public school budget item; I don’t have hard data on what percentage of Apple’s 3Q Mac sales usually come from that submarket.  But it is worrisome.

I’m not worried about the K-12 space this year. Apple has plenty of momentum and room to grow. Apple’s product mix and approach to the market is vastly different than the competition. Technology is now an education staple.

I see us squarely at the 2.55 million unit number with perhaps just a smidgen of room for on the upside surprise if the company got lucky.

Thanks, DT.  As usual I hope you are right.  And you are in good company: Deagol, and now Andy, support your number.

To be clear I do not suggest that Apple is other than well positioned vs. the competition in K-12.  My concern is solely based upon the prospect of lower technology budgets in the U.S. public schools.  I think doc has been trying to get a line on that, but I have not seen whether he had results.

[quote author=“capablanca”][quote author=“DawnTreader”][quote author=“capablanca”]I net that all out to be modestly positive and make my call 2.48MM.  The biggest risk to this is probably the public school budget item; I don’t have hard data on what percentage of Apple’s 3Q Mac sales usually come from that submarket.  But it is worrisome.

I’m not worried about the K-12 space this year. Apple has plenty of momentum and room to grow. Apple’s product mix and approach to the market is vastly different than the competition. Technology is now an education staple.

I see us squarely at the 2.55 million unit number with perhaps just a smidgen of room for on the upside surprise if the company got lucky.

Thanks, DT.  As usual I hope you are right.  And you are in good company: Deagol, and now Andy, support your number.

To be clear I do not suggest that Apple is other than well positioned vs. the competition in K-12.  My concern is solely based upon the prospect of lower technology budgets in the U.S. public schools.  I think doc has been trying to get a line on that, but I have not seen whether he had results.

Depending on the district, budgets are developed well ahead of spending, sometimes well over a year in advance. The view of technology in schools has changed and the integration of technology in many instances may be seen as a way to reduce aggregate school spending.

Apple’s approach to the market is vastly different than its competitors and depending on the installation site WiFi has significant cost advantages over wired campuses.

While Apple products may not see the demand in environments heavily controlled by consultants (who make money off of hardware sales of Wintel boxes), Apple’s resurgence in the K-12 market has inertia and substantial critical mass working in its favor.

Reducing the level of technology integration is not an option for schools so technology spending, while not immune from fiscal realities, is no longer seen as a discretionary expense as much as it might have been seen that way some years ago.

With the amazing rate of Mac adoption on college campuses, administrators can no longer resist Apple’s advance in the same way administrators might have been inclined to do so in years past. The Wintel migration has removed certain barriers to adoption as well.

Andy,

You have all the numbers in front of you. One very simple relationship I have followed is that of total Macs sold and earnings. If we see something around $1.20 and 2.4 - 2.5 million macs that relationship will break down. Just an over simplification on my part I’m sure.

Back-to-school sales will be interesting to watch over the next two years. This year, sluggish consumer spending may affect Mac sales in Q4.

On the institutional side, it all depends how funds are allocated. In many states, funds have already been allocated through September 30, and unless this year’s budgets have been prorated, institutional sales should not be affected. In some circumstances, schools may be anxious to book orders now because there is a good chance they will not be able to next fiscal year.

If consumer spending picks up during FY 2009, sales taxes will be up, and those funds may be used to amend academic budgets that have been cut. If not, the full brunt of the current economic situation will be felt on the institutional side in Q4 09 as academic budgets are pushed to the wall and year-end money may be little more than pipe dream.

[quote author=“jpashin”]Back-to-school sales will be interesting to watch over the next two years. This year, sluggish consumer spending may affect Mac sales in Q4.

On the institutional side, it all depends how funds are allocated. In many states, funds have already been allocated through September 30, and unless this year’s budgets have been prorated, institutional sales should not be affected. In some circumstances, schools may be anxious to book orders now because there is a good chance they will not be able to next fiscal year.

If consumer spending picks up during FY 2009, sales taxes will be up, and those funds may be used to amend academic budgets that have been cut. If not, the full brunt of the current economic situation will be felt on the institutional side in Q4 09 as academic budgets are pushed to the wall and year-end money may be little more than pipe dream.

I like this commentary.

As I also said (above), budgets are developed and funds appropriated several months ahead of spending commitments from the districts. There are not many districts (since public schools are governed directly by public boards and commissions) that can “save” dollars to spend in future fiscal periods.

Unlike text books, computers in a school lab are shared by several students. Further, because schools tend to be late adopters of new technology, there’s plenty of pent-up demand for Intel-based Macs in the K-12 environment.