Apple shares fall on reports of lower Jan. sales
updated 09:45 am EST, Fri February 20, 2009
AAPL slides 4 percent
Apple shares fell approximately 4 percent in Thursday trading as a result of a report originally released on Tuesday, observes Needham analyst Charlie Wolf. The report noted that retail Mac sales in the US fell 6 percent in January, at the same time as iPod sales dropped 14 percent. The situation is not nearly as bad as investors appear to have decided though, according to Wolf.
The numbers fail to account for several factors, primarily international sales, which should represent approximately 45 percent of total sales for the March quarter. Also crucial is the iPhone, which accrues its revenue over the course of eight quarters in keeping with GAAP accounting rules. While Apple reported iPhone revenue of $365 million a year ago, Needham is said to be predicting over $1.5 billion in revenue for the March 2009 quarter.
Apple is currently guiding to total revenue between $7.6 and $8 billion for the quarter, an increase from $7.5 billion last year. Wolf comments that if iPhone revenue were to be absent, as it is from the Tuesday report, Apple would instead be guiding to a 12 percent decline. By comparison, a 6 percent drop in Mac sales is believed to be irrelevant. The analyst thus continues to give Apple stock a "strong buy" rating, with a 12-month price target of $200.
Fresh-Faced Recruit
Joined: Oct 2003
Relative performance...
It's not really whether Apple grows or falls but rather what happens compared to the industry as a whole. If Apple falls 4% but the industry contracts 10%, that's actually better than if Apple grows 4% but the industry grows 10%. In the former case, Apple is still gaining marketshare.