Merrill Lynch increases Mac computer revenue growth estimates

“In a note to clients Thursday, Merrill Lynch analyst Richard Farmer lowered his iPod sales estimate to 8.1 million units from 9.2 million units for the June quarter based on historical sales data. He lowered full-year sales estimates of the popular portable media player to 39.4 million from 43.4 million units,” The Associated Press reports. “But Farmer increased Mac computer revenue growth estimates ‘given what appears to be a decent early reception to new MacBooks. As iPods decelerate, the Apple story becomes more dependent on upside to Mac estimates, which we see as plausible,’ he wrote.”

“Farmer maintained a ‘Neutral’ rating on the stock but lowered his revenue and earnings estimates to a 2006 per-share profit of $2.01 on $18.9 billion of revenue, compared with prior estimates of $2.13 per share on revenue of $19.9 billion,” AP reports. “Analysts polled by Thomson Financial estimate 2006 earnings per share at $2.08 on revenue of $19.56 billion. The analyst also slashed 2007 profit estimates to $2.55 per share on revenue of $22.9 billion, from a prior estimate of $2.84 per share on sales of $25 billion. On average, Wall Street predicts Apple will post 2007 earnings per share of $2.61 on revenue of $23.6 billion.”

Full article here.

MacDailyNews Take: If Apple hits Farmers’ estimates of 8.1 million iPod units for the quarter and 39.4 million for the year, that will be an increase of 1.945 million units over last June quarter’s 6.155 million and an increase of 16.903 million units over Apple’s last full year iPod sales of 22.497 million (Q1: 4.58M, Q2: Q3: 5.311M, 6.155M, Q4: 6.451M). Obviously, growth rates north of 600% simply aren’t sustainable, but year-over-year iPod unit sales growth continues.

Unfortunately, the AP article doesn’t spell out by how much Farmer increased Mac computer revenue growth estimates. That bit of information would’ve seemed germane to us.

[UPDATE: 12:12pm EDT: Updated Take to remove misplaced quibble over the word “decelerate.”]

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Related article:
Apple still In ‘early stages’ of iPod expansion – May 24, 2006

20 Comments

  1. Looks to me like companies all over the place upgrading AAPL trying to stop it from sliding deeper.

    and yet AAPL is still down, if it is still heading down at “bargain levels” and with tons of upgrades, o boy… i wouldnt even touch the stock until it fell below $50

  2. Nail on the head MacZeus. AAPL quadrupled over the past 3 years because iPod growth rate was between 200-600%.

    This year AAPL has lost @ because that growth has slowed considerably.

    At this point, I believe AAPL will remain relatively flat until we see some impressive Mac growth numbers. Even if a new iPod is released for the holiday season, I cant see 14 million units again. Hopefully I’m wrong:)

  3. Everyone is upgrading Apple yet it is falling.
    I think these companies that keep uprading it, are selling off their shares behind the curtains.

    why else would the stock keep falling while so many upgrades pouring in?

  4. Alan,

    I can virtually guarantee you that Apple will exceed 14 million iPods in the holiday quarter. Only approx. 10% of U.S. population has iPods – this Christmas season will easily be Apple’s biggest ever for iPods.

  5. Theory, yes, you are right. Apple is the victim of a “Bear Raid.”

    Of course, the whole market has lost 1000 points over the last month, so it’s not just Apple.

    Investors are afraid of continued interest rate hikes and a market crash.

  6. I don’t see 14million ipods during a Play Station 3 season.
    and oh, 100 other companies trying to compete Apple.

    Besides, people dont want a New ipod, they just want something that can play music, so they already got one that does just that.

  7. I would agree with Alan,

    It is unfair to talk about Apple stock prices falling when the boys at the Federal Reserve are messing with things again. Lets just hope they don’t become over zealous and cause another ’89 crash.

  8. Alan,

    Okay, I’m confident:

    Apple will sell more than 14 million iPods in the 2006 holiday quarter.

    Read the “Related article” above.

    We can check back with each other to see how right I was in January 2007 when MDN posts the results of Apple’s holiday quarter.

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