Firm believes that, on average, Street models assume around 1.45m Mac units for the Mar-07 quarter, which is down 10% q/q from Dec-06. In their checks with 20 Apple retail stores, 85% of resellers expect Mac sales in Mar-07 will decline slightly vs. Dec-06, while the other 15% expect Mac units will be flat q/q. In general, resellers defined "slightly decline" as a 5%-10% drop from Dec-06 to Mar-07. They believe, therefore, Street estimates are achievable and may be slightly conservative.
They believe Apple's new OS, Leopard, will likely be released in mid April. Slightly more than half of the resellers in checks said Leopard related purchase delays are having a slight negative impact on Macs, while slightly less than half said Leopard is not having any impact on Macs.
As was the case in the early days of the iPod, Apple resellers in firm's checks expect AppleTV will need to be more fully understood by consumers before it turns into a major contributor. Almost all (95%) resellers in the sample said they expect AppleTV will have a minor impact on business in the near term (next 1-2 qrtrs). Maintains Outperform and $124 tgt.
Notablecalls: So it looks like the Mac business is growing as expected. That's surely good news. Can the same be said for iPods? I'm not so sure.
Overall, AAPL continues to represent the only growing part of the PC business. That's enough to sustain the valuation for now. I don't expect the call to have a major positive impact on the stock today. We may see some buy interest, though.