Banc of America is out with a call on Apple (NASDAQ:AAPL) saying their Asian checks indicate recent production levels are increasing for Macs, iPod production is being cut, and iPhone is volatile.
Both desktop and notebook production numbers have moved up by 20%+ from expectations in early January, indicating potentially solid demand thus far in the March quarter, as well as some inventory replenishment. Firm believes production numbers should continue to move up throughout the quarter. MacBook Air orders also increased slightly for March, contributing to the upside. They continue to believe that desktops and notebooks are the key driver of the story.
iPod order cuts confirm BAC's conservative stance on unit growth. iPod March quarter production numbers appear to have been significantly reduced, down 10- 20% from early January and down 30%+ from early December. Current production expectations for March imply 5-10% Y/Y unit decline, versus firm's expectation for 5% Y/Y unt growth during the March quarter, implying an inventory correction and sluggish sales.
iPhone production bounces back, although still lackluster. After severe production cuts in December and early January, our recent checks reveal that production plans for the March quarter have bounced. Firm remains concerned that iPhone production and demand are lackluster.
Stock oversold and valuation attractive. They would be buyers of the stock at these levels, given our Asian checks on Mac production, and especially given they believe the main driver for the company and its stock near-term is notebooks and desktops. Reit Buy and $180 target.
Notablecalls: Not making a specific call here, just letting you know it's out there.