Today, CSFB Raised AAPL Q3 EPS .06 (.37), Rating Outperform
• F3Q Results. Apple will report its June quarter results on
Wednesday, July 13 after the market close. The Street is
currently expecting revenue of $3.3 billion and EPS of $0.31.
We expect modest upside to the Street’s revenue expectation,
but expect up to $0.06 of EPS upside based on strong sales of
Apple’s new Tiger operating system.
• Tiger is the Key to the Quarter. We now estimate Apple
shipped 2.3 million copies of Tiger in the quarter (shrink wrap,
maintenance, and included with a Mac). We believe up to 1.3
million shrink wrap copies were sold, which will likely
contribute $0.08-0.10 to the bottom-line this quarter, of which
only $0.03 is included in our published estimate of $0.31. Our
total software revenue estimate of $270 million could have
upside to $369 million in the quarter. Our analysis of Tiger
sales is included on page 2 of this report.
• Mac Still Gaining Share. The strong Tiger number implies
solid Mac sales, especially when considering Macs sold prior to
April 29 were not included in the 2 million copies of Tiger sold
by the week of June 5th (some users that purchased Macs post
April 12 did upgrade at $9.95). We believe our estimate of
1.125 million Macs (+28% y/y) has moderate upside driven by
strength in iMac and iBook.
• iPod Maintains Momentum. We believe Apple will report
iPod sales of 5.0-5.3 million units in the quarter, essentially in-
line with last quarter’s 5.3 million units. Once again, Apple’s
orders of key iPod components will likely outpace shipments,
which has been a source of investor confusion for over three
months.
• Outlook. Apple’s shares currently trade at 22x CY05 NOPAT
of $1.38 after eliminating $8.23/share in cash, and the stock has
traditionally felt support at 20x NOPAT. Given our belief that
Apple will beat consensus estimates and raise its outlook, we
would be buyers of the stock ahead of earnings. |
