A Little More On Q2 Sales Projections

Posted by: Arik Hesseldahl on February 18, 2009

Yesterday’s post concerning Gene Munster’s analysis of NPD’s January sales report, and what it may indicate for Apple’s second quarter generated a bit of irritable email from readers, for a few reasons.

First and foremost, there was the fact, which I teased at, that NPD was off late last year, when it came to iPod sales. You’ll recall in December, when I wrote this story for the magazine that iPod sales appeared to be slowing, I cited Munster’s research, which was in part based on NPD data. Munster’s Dec. 15, 2008 said NPD data gathered from October and November pointed to a slowing in iPod sales of about 18%.

Now what does NPD track? Retail sales in the US, furnished to NPD by the retailers themselves based primarily on information captured at the point of sale. Not all retailers report to NPD,(Wal-Mart is a widely cited case) though most major ones do. It’s not perfect, but what is?

Well what happened? Apple surprised everyone and managed to turn in iPod sales that grew by 3% year-on-year, and which in fact set yet another all-time record for iPod sales in a single quarter of 22,727,000 units. Why the disconnect? Well remember that NPD only tracks US sales. Apple COO Tim Cook said during Apple’s conference call with analysts on Jan. 21 that iPod sales in the U.S. did exactly what analysts like Munster had expected during the holiday quarter. They contracted by about 3% year-on-year. The growth, Cook said, was “all international.” Additionally, he said there was a “rush of buying” during the final week of the quarter.

So you may be forgiven for being skeptical of Munster’s projections this time around, given that so far there’s only one month’s worth of NPD data to work with, and that given its domestic focus, NPD clearly doesn’t tell the whole story on Apple sales anyway. Okay fair enough.

Secondly, there was another batch of readers who wrote in saying that NPD’s data set doesn’t include data from Apple’s own retail stores, and that it’s therefore not reliable. As such, the arguments went, conclusions or projections that Munster or any other Wall Street analyst might attempt to draw from NPD data are. Not true. I checked with contacts both at NPD and Apple today, and Apple does report sales data, both from the brick-and-mortar retail stores and from its online store to NPD. I’m not sure where this idea comes from. It may even have once been true. Without Apple contributing its reports, NPD’s data, and projections based on it, would be a lot less reliable, given how Apple’s retail accounted more $1.7 billion in sales or more than 17% of revenue last quarter.

Then again, its perfectly reasonable for two analysts to look at the same data and draw completely different conclusions. As Fortune’s Phil Elmer-DeWitt noted last month Munster and Bernstein Research’s Toni Sacconaghi gave their clients diverging takeaways in reports they sent their clients in advance of Apple’s Q1-2009 earnings report last month.

Munster, who tends to be on the bullish side with Apple generally, said in his earnings preview that “iPod and Mac sales appear solid,” in his Jan. 20 note. Sacconaghi was leaning more to the bearish side. The headline on his note: “Sales Weak.”

TrackBack URL for this entry: http://blogs.businessweek.com/mt/mt-tb.cgi/