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Tuesday, September 12, 2006

Calls of Note Part 2

- Morgan Stanley continues to be positive on Apple (NASDAQ:AAPL) saying they've long maintained that product portfolio opportunities (from Mac to music to video and related software/accessories) are key reasons to own AAPL shares. Firm expects today's product announcement to highlight new video-related products that extend Apple's customer reach and share of wallet. Apple's core Mac portfolio also continued to take share in August. AAPL remains their top pick into year-end.

NPD weekly POS data and proprietary channel checks point to strong consumer Mac sell-through in August. Specifically, Apple accelerated revenue growth for both consumer notebooks and desktops in the month of August. Consumer-based Mac inventory appears flushed out post the back-to-school season - another indication of strong demand.

US retail and commercial distribution data points to 29% YoY Mac Revenue growth compared to firm's current 21% YoY estimate. Every 5 points of incremental Mac revenue growth translates to $0.02-0.03 EPS.

With continued Mac momentum and new products launched today, firm continues to view upward revisions as likely over the next two quarters. Maintains Overweight.

Notablecalls: I continue to maintain the view that AAPL stock will experience some upside over the coming weeks.

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