Tuesday, March 4, 2008

Apple Stays Course With iPhone Target

SAN FRANCISCO -- Despite recent concerns that Apple(AAPL - Cramer's Take - Stockpickr) may miss its target of 10 million iPhones sold for the year, the company stayed firm on its estimate.

"It's right on track for where we want to be," Apple Chief Operating Officer Tim Cook told investors at the Goldman Sachs Investment Symposium in Las Vegas on Wednesday.

In the last few days, two Wall Street analysts have raised concerns that Apple might miss its iPhone sales numbers that it had set for itself.

Cook also played down concerns that Apple may be affected by a slowdown in the U.S. economy and offered an upbeat business outlook.

The company faces an enormous opportunity in its key business segments: Macs and iPod, he said.

In fiscal 2007, Apple sold 7 million Mac computers -- still just a fraction of the 260-million units market estimated by IDC, he pointed out.

"The ceiling for the Macs is nowhere in sight," Cook said, "and frankly even if the market itself isn't growing, for us, switching windows users is an enormous opportunity."

Shares of Apple were up $4.50, or 3.5%, to $127.26 in recent extended-hours trading. The stock had closed up $3.81, or 3.2%, to $122.96.

However, Apple is down more than 35% since the beginning of the year on fears that a slowdown in the economy could affect sales. When Apple reported its results last quarter, the falloff in iPod sales growth stunned company watchers. The number of iPods sold in the quarter grew 5% from a year ago, although revenue from the iPods business was up 17%.

But the company remains confident of robust growth. "It's an interesting point because it is the highest iPod revenue growth in a year," said Cook.

Apple focused on launching the iPod Touch, the highest priced product in the Apple line that quarter, he said.

The iPod product that didn't do well was the Shuffle, pointed out Cook. "It is our entry-level product and was down globally 17%," he said. "The Shuffle pulled the units down and iPod Touch pulled revenue up. Frankly it was much more important for us to have a great launch on the Touch and launch it successfully.

Cook also dismissed concerns that sales of iPod were flat last quarter in the U.S. because the market for the device is saturated. Nearly 40% of iPod buyers in the previous quarter were people who did not own an iPod before, he said.

Recent growth in Apple's business offers sign that the company may do better than most people expect, said Cook.

"If you look at last quarter as example, GDP growth in the U.S. was less than 1%, while Apple grew 27%," he said. "PC growth was 11% while the company's Mac business grew 44%.

[Source: http://www.thestreet.com/s/apple-stays-course-with-iphone-target/newsanalysis/personal-technology/10405328.html?puc=googlen&cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA]

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