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January 18, 2006

What To Look For In Apple's Guidance

In my preview note on Apple Computer (AAPL), I failed to provide an update as it relates to March quarter guidance. What the company says about guidance is probably more important for the stock price than what they report for December.

Among just those analysts who have adjusted since Jobs MacWorld update, EPS estimates for March range from 41 cents to 60 cents. Consensus is 48-49 cents whether you include the outliers or not. Estimates among this group of analysts rose anywhere from 2 cents to 10 cents with the average increase up 5-6 cents.

Revenue estimates for the March quarter range from $4.44 billion to $5.23 billion with a consensus of $4.84 billion. Revenue estimates rose anywhere from $275 to $900 million since MacWorld.

Read on for guidance relating to iPod and mac shipments....

iPod shipments are forecasted to decline sequentially as is normal coming off the holiday season. However, due to a perceived backlog in demand the decline is expected to be less than normal. For example, last year December quarter iPod shipments were 4.5 million and March fell to 3.6 million. Complicating matters last year was an additional 1.7 million Shuffles that shipped in the March quarter that are EXCLUDED from the comparison I just made. Using a small sample, it looks like the consensus for March quarter iPod shipments ranges from 9 to 11 million versus the 14 million shipped in the December quarter. The biggest portion of the decline is expected to come in 30GB and 60GB models while nano shipments decline but hold up better. This is consistent with reports of nano shortages at Christmas.

December quarter Mac sales are expected around 1.25 million. The ramp off this figure due to the transition to new Intel-based Macs should begin in the March quarter but it appears most analysts are assuming a gradual build over the course of 2006. A sequential gain of 100,000 units in the March quarter is expected to accelerate to a sequential gain of 200,000 units in the June quarter.

I think guidance as it relates to Mac shipments may be more important that iPods as far as the stock is concerned.

Posted by Steve Birenberg at January 18, 2006 12:02 PM in AAPL