The two big questions on everyone’s mind:
- How is Apple fairing in the global recession?
- How is Steve Jobs?
As for Apple’s business, it seems the company will be able to meet tempered expectations for Christmas sales. Guidance for the calendar first quarter, however, will be critical, and last quarter the company shocked the market by how conservative it was.
Apple has three major product lines: Macs, iPods, and iPhones.
Macs: Piper Jaffray analyst Gene Munster’s analysis of NPD Group retail data suggests that Apple’s Mac sales will be in line with expectations, up slightly year-over-year.
iPods. Munster thinks iPod sales could be higher than expected, but still down year-over-year. We’d note that the expensive iPod touch seems to have had an excellent Christmas, suggesting that iPod revenue could be higher than expected.
iPhones. The iPhone, meanwhile, is a wild card. We see them everywhere these days, and Apple had the opportunity to fill some more channel inventory as it expanded its sales network into more countries and stocked Walmart stores. The Street expects Apple to report 5 million iPhone shipments, down from 6.9 million in the September quarter (which included 2 million units of inventory). We think 6 million is achievable for the December quarter. Anything above 7 million would be big.
We don’t expect a formal update on Steve Jobs’ health, even now that the SEC is investigating Apple’s disclosures in this area. We do expect analysts to ask about it, however, and to ask about a succession plan. We do not expect Steve to make an appearance on the call as he did last quarter.
As usual, we expect Apple to offer conservative guidance. Last quarter, the company gave especially broad, conservative guidance. Given the uncertain economy, we think it’s likely they will do that again.
Dec. revenue: $9.74 billion consensus, $9.0-$10.0 billion guidance
Dec. EPS: $1.39 consensus, $1.06-$1.35 guidance
Dec. Mac units: 2.5 million consensus
Dec. iPod units: 18.6 million consensus, 20 million would be huge
Dec. iPhone units: 5 million consensus, 7 million would be huge
Mar. quarter revenue: $8.2 billion consensus, forecast could be as low as $7 billion
Mar. quarter EPS: $1.13 consensus, forecast could be as low as $0.65
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