The firm notes that analysis of iPod NPD unit data for the months of Jan & Feb leads them to expect an iPod range of 10m-11m for the Mar-07 quarter (PJ model calls for 10.3m iPods and they believe Street consensus is ~10.9m). After the first month of March quarter data (January), they had been pointing to a range of 11m-12m units. Data for the month of February, however, fell slightly from January, for both Apple and the market overall, which is inconsistent with what they have seen in previous years from January to February.
While iPod units fell slightly m/m in February, this downtick was in line with the overall MP3 player market. iPod market share was unchanged from January to February at ~70%.
Piper says they believe investors should supplement these data points with other information. It is also important to note that international iPods are not captured in this data, international had a material positive impact on iPod units in the December quarter. Maintains Outperform and $124 tgt.
Notablecalls: The call hit around noon and looking at yesterday's chart one can certainly spot the damage it did to the stock price. Must say this is something I have been suspecting for quite some time. The upcoming iPhone is hurting iPod sales. Not to mention the fact almost everyone already has an iPod. I think some pretty sizable short positions were put on following Piper's call yesterday and while there will be some bounces, AAPL's a short here.
UPDATE: Couple of more comments today on Apple:
- Prudential completed a tear-down analysis of the Apple iTV, which was released into the North American market last week.
The iTV looks like a scaled down PC. Intel's Crofton MPU (looks like a Dothan) and Calistoga chipset drive the device, along with NVidia's GE Force Go 7300 GPU. Broadcom's 802.11n WLAN chipset is in the version theypurchased, as is Realtek's Audio Codec and Fast Ethernet LAN controller.
On the memory side, Nanya and Samsung are the largest suppliers of DRAM, while Toshiba supplies a 40GB HDD. Other components are from Linear Tech (analog), Marvell (HDD SoC), International Rectifier (FETs), Cypress (Clock Chip and flash controller), Intersil (CPU voltage regulator), and Texas Instruments (analog and HDD motor controller).
While the Apple iTV is a high-visibility design win, they do not expect it to change the economic fortunes for most of its suppliers. PEG's Senior IT Hardware analyst, Jesse Tortora, who covers Apple, is forecasting only 800,000 and 1.8 million units to be shipped in 2007 and 2008, respectively.
- Morgan Stanley comments on PCs saying unit demand rebounded in February after a meaningful slowdown in January due to consumers waiting for Vista loaded PCs until late January. Total U.S. PC unit growth rebounded to a healthy 23% YoY in February, in-line with December 2006 growth. AAPL is the only vendor that appears unscathed by the Vista transition. Continued Mac momentum and strong double-digit iPod growth in the Q give them confidence that AAPL will beat expectations in the March Q.