Some Analysts Excited by Mac Sales Figures

Some analysts are looking beyond the unrealistic iPod sales expectations for 2005, and are focusing instead on the strong Mac sales figures. Analysts from Needham & Company see the Mac as a strong force in Appleis performance during fiscal 2005.

The key to Appleis 57 percent revenue growth was directly linked to the 48 percent increase in Mac sales, substantially higher than the overall PC growth rate of 12 to 15 percent. Needham attributes most of the increase to Windows users switching to the Mac, since it feels sales to existing Mac owners were relatively flat.

The disappointment for most investors was the actual number of iPods shipped. Apple shipped 6.45 million units, up 5 percent for the quarter, and 220 percent for the year. Most investors were hoping for numbers near 7 million, and even as high as 8 million units shipped. Needham sees the estimates as totally unrealistic.

Needham analyst Charles Wolf noted "The weakness in iPod shipments relative to some estimates (not ours) was largely an illusion."

The over night drop in Appleis stock value may have been a knee-jerk reaction to the companyis failure to meet unrealistic expectations.

Wolf sees investors reaction as an opportunity. In his report from this morning, he states "In our opinion, the sharp drop in Apple?s share price in after-hours trading because of the perceived shortfall in iPod sales (for reasons we regard as trivial), along with the dismissal of the superb performance of the most important metric (namely Mac shipments) represents a unique buying opportunity."

Needham is raising Appleis fiscal 2006 earnings estimate from US$1.65 per share to $1.75.

Currently, Appleis stock is recovering from an overnight drop from $51.59, and is trading down 1.84 (3.57%) at $49.75.

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