Analyst: Apple Beating Recession So Far

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The economy may be hurting, but Apple is still showing strong quarterly results and is doing well despite slowing Mac sales. Portable Mac sales are picking up the slack for now, but UBS analyst Maynard Um thinks laptop sales will have to increase even even faster if the downward trend for desktop sales continues.

"Desktop units were weaker than expected with [Apple's] management commenting on a shift toward portables (a trend resembling the overall PC market)," Mr. Um said. "If the trend continues (uncertain if it will, but certainly bears watching), portables will have to grow at a much faster rate to offset desktop weakness, which we think could prove challenging depending on the slope of the decline."

Mr. Um is projecting a 20 percent unit decline in fiscal 2009 and a 4 percent growth in fiscal 2010. He also expects Apple may see another sequential decline in iPhone sales until a new version of the combination iPod and smartphone is released.

Despite the potential for lower sales in the second quarter, Apple's numbers still look good. "With expectations set very low into the quarter, Apple's results should result in a relief and, in the near-term, allay near-term concerns regarding downside EPS risk," he said.

Mr. Um is maintaining his "Neutral" rating and US$110 target price for Apple's stock. Apple is currently trading at $87.67, up 4.81 (5.81%).




Apple is in a better position than most to combat saturation problems with the desktop PC market. HP and Dell are at each other’s throats to show any movement. Meanwhile, Apple’s goal is to switch users and build new customers onto a different platform. It’s not without it’s problems, but theirs is now the more enviable position. Vista’s flop means Apple has serious potential for gains for two to three years out.

Getting the whole SJ health issue out of the way now may even make it easier. Take your lumps while things are good and it hurts less. Most realists know he’s not there indefinitely anyway. The next generation is taking charge and we’ll see where they lead the company. Tim Cook is a great start.


Um, neutral? Um, unbelievable…

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