As Apple Shares Slide, What About Sales?

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Mixed Signals

The casualties of the soft PC sales environment are already piling up. In a presentation at a Bank of America (BAC) conference on Sept. 16, Dell Chief Financial Officer Brian Gladden bluntly complained of a "very weak August" with sales that were "weaker than usual" and that sales hadn't snapped back in September.

Will Apple be one of those casualties? Gene Munster at Piper Jaffray (PJC) thinks not. In a note issued on Sept. 22, he said the latest data on retail sales from research firm NPD suggests that Apple may be holding its own despite the weaker economy.

Munster raised his estimate for Apple's per-share earnings to $1.17 from $1.11 and boosted his revenue forecast to $8.37 billion from $8.07 billion, mostly because he thinks sales of Macs, iPods, and iPhones will be higher than previously expected. Citing NPD, he says Mac sales were up 32% in July and August. "Even if we assume continued year-on-year growth of 23% in September—which we believe is conservative—the overall year-on-year growth rate for the full quarter would come in at 29%, implying 2.8 million Macs in the September quarter," Munster wrote, which would represent a boost above prior estimates by 300,000 units.

Additionally, Munster wrote, for the first time the iPhone will account for a meaningful percentage—he thinks 21%—of booked revenue. Apple records revenue from the sale of iPhones over 24 months, so as more iPhones are sold, a more predictable stream of revenue emerges in succeeding quarters. He says booked revenue could total more than $10 billion for the quarter.

Saved by Demographics?

Shaw Wu of American Technology Research in San Francisco shares the upbeat view. "In two of its three big franchises, Mac and iPhone, penetration is very low and starting in the higher-income demographics," Wu wrote on Sept. 22. "The disturbance in the macroeconomic environment is within lower-income demographics.… We believe AAPL's business will remain strong in the near- to medium term. Enough high-end consumers are still buying tech."

Asked during a July 21 earnings conference call about the state of the economy and any visible effect on Apple's sales, CFO Peter Oppenheimer dodged the question, saying he'd "leave the economic commentary to others" and that he saw no "obvious impact to our business." The question may be harder to dodge next month.

Hesseldahl is a reporter for BusinessWeek.com.