Wednesday, September 27, 2006

Calls of Note Part 1

- Thomas Weisel Partners comments on Apple (NASDAQ:AAPL) after just completing a round of about 30 channel checks with Apple specialist resellers and Apple retail stores across the United States, and their checks suggest strong demand for Intel-based notebooks. Firm's checks suggest that 50% of Mac buyers are switchers and that there is quite strong demand for MacBook. Checks also indicate a healthy demand/supply balance and availability for most products; thus, Apple should be in a position to deliver upside relative to firm's original estimates for notebooks. They continue to believe that the real key to the Apple story over the next 12 months will be the actual Mac units sold, as iPod momentum is likely to fade somewhat.

iPod checks suggest relatively less excitement related to new products compared to previous launches. More than 70% of checks indicated that iPod demand is the same or worse compared to last quarter and the firm saw limited stock-outs, the first time in recent memory when
Apple has sufficient supply of the newly launched products.

TWP believes that the strength on the notebook side could mean that Apple might post numbers above current Street estimates, but notes that expectations appear to be increasing. They are increasing their ests as well.

At a 26.4x C07E P/E, Apple is slightly above the group average of 21.1x, but on a PEG basis, Apple is at 1.3x below the group of 1.7x. This suggests valuation is reasonable, thus they maintain a Peer Perform rating.

Notablecalls: Not actionable but good to know category.

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