Finally, Sensible Talk About Apple Q4

For weeks I've suffered through Piper Jaffray analyst Gene Munster's ridiculously bullish predictions on Apple holiday quarter sales. What? Did somebody ship Gene a case of Apple Kool-Aid? He's talking like he has been drinking lots of it.

But Gene has been coming off the high, when he got absolutely giddy after Black Friday when his store checks had Apple selling 13 Mac portables an hour. Assuming 13 hours of sales that's 169 units per store or more than 40,000 for all the stores—not counting Apple online or other retailer sales. That would be a fat 1 million units if Apple kept the pace for every sales day through Christmas Eve. But that's never going to happen. So what was Gene drinking? Apple eggnog?

In two more recent reports, one released today, Gene is talking more sensibly about Apple sales during the holiday quarter. But somebody is still spiking his punch. He's holding to Mac shipment estimates of between 2.5 million to 2.7 million units. The numbers have got to come down more. The problems I see:

Over the last week, other analysts have finally stepped up and started saying what's needed: Apple is vulnerable to the economic downturn, just like everybody else. Goldman Sachs analyst David Bailey cut his rating on Apple stock, today. Sensible analysis of recent Wall Street perspective changes came from Silicon Valley's Dan Frommer earlier today:

What the numbers remind us:

• Mac sales growth has hit a wall. A year ago, Apple reported 44 percent year-over-year Mac unit sales growth. Even last quarter, the company reported 21 percent year-over-year Mac unit sales growth. This quarter, it could even be single-digit year-over-year unit sales growth.
• Despite new MacBooks, Apple's Mac business is no longer leading the company's growth. The iPhone is Apple's most important business.
• iPod sales have probably peaked for good. The current iPod lineup will never top the 22.1 million iPods shipped that Apple reported last Christmas.
• We think there's a bright future for the iPod Touch and an Apple touch/tablet platform. But we don't think they'll be called iPods forever. (We think Apple will still be able to sell iPod nanos and shuffles for several years, but not in the volumes they used to.)

I agree with Dan. Apple's Mac sales have hit a wall. Big gains are over, and maybe against Windows computers. I'd watch for Mac marketshare to recede against Windows PCs next year, if the recession persists as expected.

That said, for the holidays, Apple has some built-in buffer—cool, as in status symbol—that spreads high and low in the market. Here's where I go out on one of those speculative limbs and hope the bow doesn't break. I've got no hard data to back up conjecture (OK, usually smart—and often right—intuitive speculation). There are plenty of wealthier consumers with the means and inclination to buy new MacBooks during holiday 2008. That's high end. The low: Younger Net Geners with fewer financial obligations, remaining credit (meaning not maxed out) or who are in college. Apple's brand is strong among Net Geners.

These two categories of buyers are more likely to have the inclination and means to buy new Macs, most likely portables during the holidays. Even so, I remain hugely cautious. Over the last couple weeks, I've occasionally staked out the two San Diego Apple Stores. They're simply not busy. Last Christmas, these stores were packed with people. Even from September, store traffic is less, based on my observations. My spot checks of two stores are no basis to generalize about Apple sales everywhere. Nevertheless, they are foreboding.

Posted by Joe Wilcox on December 15, 2008 7:57 PM