Strong Black Friday weekend sales and continued heavy demand for iPhones, iPads and Macs mean that December quarter estimates of Apple Inc.(NASDAQ:AAPL) may prove conservative.
Apple sees December quarter (first quarter) revenue between $55 billion and $58 billion and gross margin between 36.5 percent and 37.5 percent. Wall Street expects revenue of $57.24 billion, according to analysts polled by Thomson Reuters.
Black Friday Sales of Apple iPad Air, iPad, iPad Mini Retina, iPad Mini and iPhone 5S were extremely strong and could have exceeded internal expectations by at least 15 percent.
[Related -Record Sales For Wal-Mart Stores, Inc. (NYSE:WMT) And Three Stocks That Could Benefit]
Apple stores enjoyed heavy traffic throughout the holiday weekend. In contrast to previous years, Apple appears to be managing solid levels of supply at its retail stores and inventory restocking was frequent as the majority of stores.
Wi-Fi versions of iPad were out-selling carrier versions. Customers chose the 128GB version as most customers were used to storing only music, now they can store HD movies, too. On the other hand, the iPad Mini was in high demand and short supply.
Deutsche Bank analyst Chris Whitmore said, from a channel perspective, the iPhone 5S was well stocked and able to support high levels of demand with only a few Best Buy stores he contacted on Friday reporting stock outs. However, the channel appears to be struggling to keep up with the heavy demand for the iPad Air with supplies running thin at carrier stores.
[Related -Apple (AAPL) Triggers Bull Flag With Fibonacci Update]
Black Friday discounts have supported demand for Apple products. This year, Apple broke tradition and offered one day discounts on many of its products in the US and selected Apple stores throughout the world, including, Australia and Europe. As opposed to the traditional price discounts, the US and Australian Apple stores offered a series of store credits ranging from $! 25-$150 that appeared to drive strong demand for Apple products.
Apple kicked off the season with store credits offered in the range of about 8-13 percent on MacBook Pros, 12-15 percent on MacBook Airs, 8-12 percent on iMacs, and 8-15 percent on iPad Airs.
Whitmore said the discounts/ gift cards appear to have catalyzed incremental demand for Apple products, which are rarely discounted. In addition, on-line retailers such as Amazon, Wal-Mart and Best Buy provided discounts of about 1-11 percent across the Apple portfolio often using the Apple products as 'doorbusters' to drive additional foot traffic through their retail stores.
Wal-Mart called out a robust 1.4 million tablet unit sales on Thanksgiving and highlighted iPad mini as a top seller. In addition, eBay mentioned that it was "selling iPads at a rate of one unit per second as of midnight".
In addition, Apple experienced healthy demand for Macs and had sufficiently stocked its retail stores. Whitmore's checks suggest the MacBook Air continues to be a customer favorite and the 11" entry level MacBook Air was the most popular, aided by attractive Black Friday discounts.
Top Performing Stocks To Invest In 2014
As a result, demand for Apple products started the holiday season extremely well. iPhones and iPads (Air and Mini) are tracking above consensus estimates while Macs are tracking roughly in-line.
Meanwhile, acceleration in peripheral sales and app store application sales would lead to margin expansion.· More customers are buying Apple smart case, which retails at a minimum price of $30, and this is an 80 percent margin business for Apple. App purchases on App Store is also a high margin business for Apple, which retains 30 percent share of sales while the developer keeps the balance 70 percent.
Whitmore says he is becoming significantly more confident in near-term estimates for Apple. In fact, if curren! t momentu! m is sustained through the end of the year, the December quarter estimates could prove conservative.
The combination of extremely robust customer reception to its recently upgraded lineup and these future high margin, high ASP product launches,should increase investor confidence in the medium-term margin and earnings profile for Apple.
No comments:
Post a Comment