“Desktop units were weaker than expected with [Apple’s] management commenting on a shift toward portables (a trend resembling the overall PC market),” Mr. Um said. “If the trend continues (uncertain if it will, but certainly bears watching), portables will have to grow at a much faster rate to offset desktop weakness, which we think could prove challenging depending on the slope of the decline.”
Mr. Um is projecting a 20 percent unit decline in fiscal 2009 and a 4 percent growth in fiscal 2010. He also expects Apple may see another sequential decline in iPhone sales until a new version of the combination iPod and smartphone is released.
Despite the potential for lower sales in the second quarter, Apple’s numbers still look good. “With expectations set very low into the quarter, Apple’s results should result in a relief and, in the near-term, allay near-term concerns regarding downside EPS risk,” he said.
Mr. Um is maintaining his “Neutral” rating and US$110 target price for Apple’s stock. Apple is currently trading at $87.67, up 4.81 (5.81%).