Analyst: Apple 2Q Earnings to Beat Estimates

Mac sales for the March quarter will likely be flat at best, but Appleis earnings should still come in above the Streetis estimate of US$5.2 billion, according to Piper Jaffray analyst Gene Munster. Favorable component pricing during the quarter should also help Apple beat Wall Streetis $0.63 EPS target.

After interviewing Mac resellers, Mr. Munster is predicting that Apple will report a slight decline in Mac sales compared to the same quarter last year, but overall higher sales than analysts are expecting. "We recently spoke with 20 Apple resellers and found that 85 percent are expecting a slight q/q decline (5 to 10 percent) in Mac sales," he said. "The Street is expecting Mac units to fall 10 percent q/q, so we may see slight upside to Street expectations of 1.45 million Macs."

Mac market share will also likely show a slight dip during the March quarter to 2.3 percent from Decemberis 2.5 percent. But Apple should see an overall mid and long-term market share increase as iPod+iTunes Windows users switch to the Mac because of the platformis superior media management.

The iPod, however, is a different story. While analysts have been predicting Apple will report about 10.7 million units sold in the March quarter, the company is more likely to report over 11 million units sold. Mr. Munsteris higher estimate is based on Appleis announcement from April 9 that it had sold 100 million iPods.

He commented "Subtracting total iPod units reported through Dec-06 (about 89 million units) from the 100 million units, and accounting for the 9 days in April, implies Q2 iPod units of about 11 million."

Mr. Munster is maintaining his "Outperform" rating for and $123 target price for Apple stock. Apple is currently trading in the pre-market at $91.65, up 0.68 (0.75%).

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