Tuesday, April 03, 2007

Calls of Note Part 1

- Thomas Weisel Partners comments on Apple (NASDAQ:AAPL) after completing a round of 30 channel checks with Apple specialist resellers and Apple retail stores across the United States. Firm's checks suggest s seasonally soft quarter for Mac and iPod, which is not surprising given normal seasonal demand trends. They note, however, that another 30%-plus q/q decline in Flash pricing should help margins; thus, they expect Apple to report EPS ahead of consensus.

TWP believes that, on a sequential basis, Mac units will likely decline in mid-single-digit area, but possibly be ahead of the Street assumptions on a revenue basis (they are at $5.39bn in total revenue versus Street at $5.17bn).

iPod nano still a dominant MP3 player, but checks suggest seasonal drop-off in demand compared with very strong December quarter: Again, not surprising and consistent with expectations of a 48% q/q decline in units. 4GB iPod nano remains the best-selling iPod, and Apple continues to outsell competition by 8:1 ratio.

Checks indicate limited interest in iTV thus far. Firm does not view this product as a large opportunity, as they believe there are less than 6mn PVR-type devices sold in the marketplace annually at present.

With 15-40% q/q declines on various Flash capacities, the firm believes Apple saw another sequential benefit in gross margin, and that average iPod margins are likely now above 40%, two times the levels seen in 2005. They bump their gross margin assumption to 30% (likely conservative) from 29.5%, and arrive at a $0.69 EPS estimate (excluding $0.03 option) versus prior assumption of $0.67 (Street at $0.66). TWP is also bumping up their June quarter revenue estimates due to higher Mac revenue, but remains below consensus on revenue (in-line EPS).

Firm believes the growth opportunities continue to be strong for Apple, but that those opportunities appear to be well understood by the investment community and, thus, reflected in the current stock price. Maintains Mkt Weight rating.

Notablecalls: Not actionable but good to know category. I continue to be cautious on AAPL and still think it's a short around current levels. Oh and btw, a boutique firm was out on AAPL last Friday saying that based on their intel the 4GB iPhone will be available on June 11 but the 8GB model will not arrive til mid-August.

1 comment:

David said...

Long time reader, RSS subscriber, and frequent "page refresher". :-)

First time commenter.....with a question about Apple.

Did you hear anything about a positive UBS comment on Apple today (April 4th)? This was reported on CNBC at 2:05pmm EST....but I don't see anything about it anywhere.