Gene Munster on Apple’s forthcoming quarter
November 27, 2008 by Dan Butterfield
Apple was up 4% today, and the Fast Money traders discuss whether Apple can beat the Black Friday blues.
Dylan Ratigan: Gene do you think Apple can pull something off here (i.e. move product and beat quarterly estimates)?
Gene Munster: Well, it sounds illogical, but we’ve been camping in the stores for the past several weeks and we do it every quarter … we’re counting iPhones, we’re counting Macs and surprisingly it’s very strong … it seems that the December quarter, as of November 15th, is tracking at the high end of their guidance, and as far as the iPhone is concerned major geographies are getting rolled out this quarter with Russia, Greece and Brazil … and so there’s still some room to go …
Ratigan: Still some room to go? Higher? Lower?
Munster: Yes I think so … Room to go Higher. Ultimately if Apple makes their quarter … this quarter … because it’s obviously a target for investor concern; the high-end consumer … If they (Apple) can pull this off this quarter I think that’s going to be a shot in the arm that’s going to show that maybe they’re not immune to it (the gloomy economy) but they’re definitely kicking the trend …
Jeff Macke: Hey Gene it’s Macke … (with a tone of sarcasm) Far be it for me to question the Russian consumer, because we all know that is one of the brick countries that’s growing explosively … (joke over, now serious) But honestly there’s a yawning chasm between Apple’s guidance and where you guys (analysts) are in terms of the numbers … Is them beating their own guidance, which is historically sandbagged, really gonna be enough to support the stock here?
Munster: We think so … we’ve been market testing, we’ve been meeting with investors for the last three weeks, the general consensus (among investors and analysts) is that Apple is going to have a big slow-down … whether it’s this quarter or next quarter … And I think that if they hit the high end of their guidance range, and granted that still would be 15% to 20% macro, I think that would be a shot in the arm in terms of confidence for investors and would be a positive for the stock (AAPL).
Macke: Just for this quarter … How much higher is your estimate (Piper Jaffary’s) versus their (Apple’s) guidance? Out of curiosity, I’m trying to get a grip on where their estimate’s at?
Munster: We’re (Piper) at $10 billion in revenue and their (Apple’s revenue) guidance was $9 to $10 billion.
Pete Najarian: Gene, what’s the next big growth driver for these guys? I mean the PC demand … You see all the analysts … Goldman Sachs said that PC demand basically bottomed out. What the next growth driver if it’s not the iPhone … if it’s not Macs?
Munster: It has got to be the iPhone … And we’re looking for the Mac trade show (MacWorld January 2009) to have new iPhones. We still believe that there are gonna be new form factors (e.g. a nano iPhone and/or a customized nano iPhone for China Mobile) at that point. And this international roll-out … don’t under-estimate that. They (Apple) had one-hundred-fifty-million (150,000,000) addressable subscribers at the beginning of June and they’ll have close to a billion (1,000,000,000) by the end of this year. So the iPhone is clearly positioned to be the growth driver for 2009.
Ratigan: Last question for ya Gene and we’ll let ya go … A lot of folks own this stock at much higher levels … they’ve had it for some time and they’ve had their derrieres kicked along with so many others in this name … your counsel to someone who has ridden Apple (AAPL) down after having ridden it up?
Munster: You want to own the fundamentals … The fundamentals continue to be tracking well and in a tough economy this stock should do better than most.
See VIDEO > HERE