With Leopard now shipping in October, firm believes Apple has pushed $25-50 million in revenue out of the June quarter, and roughly $100 million out of the September quarter. While Apple should be able to fully recover the software revenue in the December and March quarters, the delay could also push out some Mac sales as well. This will undoubtedly make Apple even more conservative in setting June-quarter targets on its April 25 earnings call, probably pushing Street estimates closer to their $5.2B in revenue and EPS of $0.65 from current consensus of $5.5B and $0.68.
Although the push out of Leopard is not ideal, firm views iPhone as the driver of the next leg to the Apple growth story and this announcement should abate recent concerns about any potential delay in the launch, which they believe is more important to the stock. Today's announcement and the potential for even more conservative targets for the June quarter could cause some near-term weakness in AAPL shares. Firm would use this as an opportunity to add to positions.
- Merrill Lynch recommends investors use the current stock weakness related to Apple's delay of the Leopard operating system as a buying opportunity as it represents a temporary setback and they believe their long-term thesis is intact. Leopard will now ship in October instead of June, which Apple attributes to engineering & QA resources pulled from the OS X team to help finish iPhone (which the company says is "on schedule" to ship by late June). It underscores the fact that the iPhone is at least as much a mobile computer as a phone or music player. Leopard will still be available in beta version for developers in June at WDC.
- Piper Jaffray says that iPhone's on-time arrival outweighs Leopard delay. Despite the PR black-eye Apple will get from delaying Leopard (given Apple routinely chastises Microsoft for product delays), the announcement included that Apple will release the iPhone on time in June. While it's never a sure thing, this means firm's confidence in the iPhone coming in June goes from 70% to 90%. Apples track record at getting hardware out on time is hit or miss, as evidence by the recent one month slip of Apple TV. Apple's statement specified late June as the launch date of the iPhone, but Apple may deliver it earlier at the Worldwide Developers Conference, which begins on June 11. While they are not convinced the delay of Leopard is entirely related to getting the iPhone out on time, firm views the shipment of the iPhone as critical, and the timing of Leopard as a non-event.
Notablecalls: We have three tier-1 firms out saying to buy the weakness. Who am I to argue them? Buy the stock near $90 for a nice bounce, perhaps back to the levels of yesterday.
AAPL 1-yr chart: