Tuesday, October 17, 2006

Calls of Note Part 2

- UBS comments on Apple (NASDAQ:AAPL) noting surveys and checks continue to show that demand for MacBooks remains strong, with strength continuing even beyond the back to school season. In line with firm's expectations, recent store visits and surveys continue to show solid demand for the new Apple MacBook, as well as the MacBook Pro, which they believe bodes well for fiscal 4Q Mac sales and future results (note Apple reports fiscal 4Q results on Wednesday, October 18th after the close). During firm's checks over the past few months, representatives at CompUSA, as well as at Apple stores, continue to see solid demand for the MacBooks, with checks this month indicating that MacBook strength has continued beyond the peak back to school spending season, which ended in mid-September.

Online wait times for MacBooks just recently fell to 24 hours after holding in the 5-7 business day range throughout the back to school season and checks show the education segment should also lend support to Apple's fiscal 4Q estimates given July is when new school district annual budgets come into play. With the education segment accounting for approximately 25% of US Mac unit sales and new products featuring Intel processors shipping, UBS believes fiscal 4Q could see solid growth especially for MacBooks and new iMacs. They note that recent NPD data placed retail Mac unit growth at 43% y/y in August (vs. market growth of 36%) with notebooks up 63% driven by solid demand for MacBooks.

Firm continues to expect Apple to upgrade MacBook Pros with new Core 2 Duo processors for the holidays. For calendar 2007, checks also indicate Apple may be working on "ultra-portable PCs" and even notebooks equipped with NAND flash memory in addition to or in the place of hard disk drives, which can offer users an "Instant-On" functionality for booting. They believe these new products could be available at some point next calendar year, but they are not in firm's current model.

Notablecalls: Just some additional background info ahead of results. Not actionable.

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