Analyst: Apple appears ‘recession proof’
With less than two weeks before the end of Apple’s March quarter, Shaw Wu of American Technology Research expects the company to shake off the doldrums that are dragging down the rest of the U.S. economy.
“Our sense is that the Mac business is recession proof,” he writes in a report to clients issued Thursday morning. Based on his supply chain checks, Wu sees good news throughout Apple’s (AAPL) product line:
- Rather than the 38 percent year-to-year growth in Macintosh unit sales he had earlier predicted, he now thinks growth may be closer to 42 percent.
- After a strong start and then a lull, he sees Macbook Air sales picking up rapidly. “Customers are attracted to its super thin form factor and do not seem to mind some of its limitations.”
- He’s seeing a bump in iPod sales following the shuffle price cut, and now expects iPods to come in at the high end of his 9.5-10 million unit range (but lower than the Street’s 10.8 consensus).
- He sees a pause in iPhone sales following the well-regarded SDK announcement as customers wait for the June release of iPhone 2.0. He’s modeling 11 million iPhones for the year, slightly ahead of Apple’s 10 million target.
- Falling prices in component parts should sweeten Apple’s March report, due out April 23, and Wu is raising his estimates accordingly. He writes: “For the March quarter, we are now modeling $7 billion and $1.10 in EPS (from $6.9 billion and $1.02) vs. consensus of $6.92 billion and $1.05 and its guidance of $6.8 billion and $0.94.”
Apple products are food for the intellect in us all. Who doesn’t need food? Yes, its recession proof.
“Customers are attracted to its super thin form factor and do not seem to mind some of its limitations.” – this statement could describe all AAPL products and its customers.
No consumer tech company is recession-proof. The same crap was spewed before the tech bubble burst. News flash for Wu – consumer spending on luxury items drops in a recession.
Love the fanboys lining up to agree with a forecast that just happens to reinforce their pie-in-the-sky AAPL fantasy. AAPL had a nice run but all stocks mean revert – just look at CSCO, MSFT, DELL, etc.
The lesson you all need to learn is that great products does not necessarily equal a great stock.
“what an idiot! no tech company is recession proof”
Of course not. But Apple manages to grow when others are shrinking. What do you call that?
Apple is stealing market share from Microsoft. Apple is doing things right (for a change), while Microsoft is doing things wrong. Apple gambled a while back with the iPod, a VERY expensive portable music player, and the gamble PAID OFF.
The problem with other companies is that they are not willing to take risks anymore. Of all the computer companies out there, Apple is the only one bringing to the market new and bold products.
Traditionally Apple has been the one changing the computer landscape … remember the Floppy-less iMac? Now the no CD laptop? How about the no keyboard phone?
Other companies are playing the catch up game with Apple’s designs. You will see Blackberry doing an all screen design .. why is that I wonder? And you already saw how the Zune looks almost the same as an iPhone… with some color changes (brown???).
what an idiot! no tech company is recession proof. tech depends on business investment and private consumption growth. the gathering recession in the US will see steep real declines in both. for analysts still wet behind the ears, this means tech revenue will also see steep real declines. implication: falling tech stock prices…
Mike sez,
I love Apple products, the only draw back is the price. I would love to own more Macs.
Be careful of Apple products! If there’s a physical problem with your Apple machine, you will be in for a repair hell. See http://applequalitycomplaints.blogspot.com/
Apple’s sales are going to be higher than expected just like last quarter. Last quarter set records, but Apple predicted this quarter would be slightly down so instead if the stock going up it went down. The same thing will happen again, so even though Apple is kicking butt, investors are sheepish.
Well, not all of them.
Actually, the drop may have also been due in part to hedgies trying to get liquid…
The drop in Apple’s stock factored in the worst possible scenario’s with the recession. This was a natural and healthy reaction even if it was overdone. Now that we see the sky is in fact not falling Apple will most likely get back to the mid 150’s fairly quickly.
This is astounding news. The sky is falling! Wait, AAPL is selling MORE computers? While the sky is falling? LOTS more? How can this be? PED, what’s Wu’s track record? Any rumor on the next iPhone countries?
I have an old powerbook G4 I purchased in 2001. It still works better than any new PC laptops. I love Apple products, the only draw back is the price. I would love to own more Macs.
Where is Wall Street?We knew this; where on earth are the analysts and investors? Is this the marketplace’s best kept secret? It defies logic….
Its true, and here’s why: Microsoft’s windows, and HP, Dell, and the like’s, require new sales to grow. Apple’s focus is conversion, which means all current PC owners are potential new customers. And the osmotic (?real word?) pressure between them is such that every one percent decline in Windows marketshare is a huge percentage increase for apple. So they will double many more times if they are able to continue this ride for the next decade
can you please clarify the iPhone targets? i was under the impression that apple targeted 10 million TOTAL iPhone sales by the end of 2008 (starting from june of 2007 when they first went on sale). so, is the 11 million target by shaw wu for just 2008 or since inception?
also, why the negative spin on the iPhone estimates? couldn’t you just as easily have written “He’s modeling 11 million iPhones for the year, which best apple’s own lofty estimates by a whopping 10 percent!” ?
thanks.
Re the targets: a common misunderstanding, but it’s been cleared up pretty definitively. See, for example, here. –Philip Elmer-DeWitt
About time Most of us knew this to be true all along. Allow us some time to gloat! Go Apple!
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
Apple has always been the computer of choice for entrepreneurs. When layoffs force talented people to convert their skillsets from staff member to competition, the best and brightest get a business license and a Mac.
Economic downturns mean a rise in demand for Macs.