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BloggingStockCast: Apple taking a larger bit out of retail sales

In the latest BloggingStockCast, I talk about increasing sales of Apple, Inc. (NASDAQ: AAPL)'s computers in the retail space.

Apple's (AAPL) iPhone and Mac sales estimates are right on the mark

When it comes to predicting various product sales from hipper-than-hip Apple (NASDAQ: AAPL), it's good to know that we have more than financial analyst statistics and feelings to look at. One stock watcher recently hung out quite a bit at several Apple retail stores to try and collect empirical data from his own two eyes to see if Apple's analyst-predicted iPhone and Mac product sales numbers are indeed stacking up or are falling short.

The conclusion? Apple will most likely achieve its goal of 730,000 iPhone sales in the quarter ended September 30. In fact, the conclusion this analyst came up with from his store checks indicate Apple could bypass its own estimate and sell over 800,000 iPhones in the July-September quarter.

As far as Apple Mac sales go, Gene Munster's research stated that about 2 million Mac systems would be sold in September alone, pushing past his earlier estimate of 1.9 million. It's interesting to note that the average Apple retail store sells over 55 Mac systems per open day, not counting website sales or other retail sales, like those inside Best Buy (NYSE: BBY) locations. Are Apple shares headed above $200 territory? Munster maintains his $211 target.

Apple and Best Buy teaming up a winning combination

Apple, Inc. (NASDAQ: AAPL) and Best Buy (NYSE: BBY) announced that they will roll out the Apple stores mini-version in the Best Buy stores. Apple and Best Buy ran a test on 57 of the Best Buy stores with dedicated space for the Apple Mac and other peripherals. Best Buy stopped selling the Mac computers back in 1998 because of low demand and very lackluster profitability.

Apple pulled out of all major retailers and began to build their own retail distribution channels. The success of the system has been stellar. The 173 stores have the highest sales per square foot of any retailer in the world. Apple sells over $4,000 of merchandise per square selling -foot. To leverage this franchise further, Apple and the best electronics retailer ran this 57-Best Buy store test.

Although neither Best Buy nor Apple would comment on the profitability of the venture or the margin split. Best Buy seems happy enough to now roll out the dedicated Apple mini-store -within- the -store to 200 of their units. Currently Apple has a 5% market share of the PC industry thus allowing for room to grow.

Best Buy has been quite negative on Dell and does not recommend Dell computers to their customers. The best sellers at Best Buy are Hewlett Packard Compaq and Gateway. Adding a strong presence of the Apple Mac is creating incremental sales for Best Buy and of course Apple. As far as Wall Street is concerned, analysts have not factored in any additional revenues from the Best Buy channel. How much and to what degree will be calculated after Apple releases its March quarterly numbers on April 26th.

I think it's safe to say, the numbers are not going to go down!!

For more stock ideas from Georges visit Yared Investment Research

Short Apple here? Yeah, right...

There was a story circulating some brokerage firms trading desks yesterday afternoon that the March quarter for Apple, Inc. (NASDAQ: AAPL) iPod sales may be a little light versus estimates. The Street has modeled for Apple to sell between 10-11 million iPod units for the quarter. There was discussion then that January sales actually were tracking better than the 10-11 million run rate, so estimates were moved up to 11-12 million units. The February sales apparently are rumored to be a little off pace, therefore the quarterly expectations just for the iPod may be missed. Therefore, there were some hedge funds trying to "sell" that news out in the market place, and of course, with that -- short the shares.

Give me a break. Who really cares about the March quarter numbers for the iPod? The quarterly revenue and earnings estimates should be comfortably achieved with Mac sales, iPod sales, new cpu and software upgrades, etc. The story for Apple is not the first quarter of the calender year -- never has been. The iPod sales are extremely relevant for the December quarter as the Christmas season is all important. The numbers this past December quarter were more than 21 million iPod units sold. The installed base for iPod is over 90 million units. The iPhone will be launched in the June quarter. Do you really want to be short Apple going into that hoopla? I don't think so.

I chatted with three portfolio managers about their expectations for Apple. Two of the three feel Apple trades up to $110 by July on iPhone excitement and the third manager feels Apple goes to $130-140 by year end as investors focus on a $4 per share earnings number for calendar 2008. He also feels 2009 will look like $5 to $5.50 as the momentum for iPhone continues unabated.

Continue reading Short Apple here? Yeah, right...

Will Apple beat expectations at the upcoming earnings call?

Apple, Inc. (NASDAQ:AAPL) in its last earnings report declared that 2007 was going to be an exciting year for the company. It may be exciting in all the wrong ways, however, as legal battles are already shaping up over its next major product and with a continuing investigation into stock options irregularities. It will be both a great year for products, and an interesting year to watch how this company makes it through some upcoming challenges. How Apple starts the year with announcements about its earnings over the holidays could have an important impact on the stock.

In Apple's last meeting in October, Peter Oppenheimer said to expect $6 to $6.2 billion of revenue and $0.70 to $0.73 earnings per share.

Goldman Sachs Group, Inc. (NYSE:GS) calls for better-than-expected results, somewhere in the vicinity of $0.79 per share and $6.38 billion. Piper Jaffray's Gene Munster also expects earnings to come out a few pennies higher, and Munster often seems to read Apple retail better than other analysts.

With analysts betting on above-expected earnings, and such signs as iPods flying off the shelves and high traffic to Apple retail and websites, the money looks to be on Apple to beat earnings. But what's your vote?

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.

Apple says that over 50% of new Mac purchases are by first time users

Apple Computer, Inc (NASDAQ: AAPL) welcomed another strong quarter of bringing brand new Mac users into its fold. At its most recent quarterly earnings report Apple told analysts repeatedly that this quarters percentage of Macs sold to first time Mac owners or users was up over 50%, a figure that they found very exciting. At the last quarterly report Apple said that 'nearly 50%' of its users buying computers in the retail stores were new to the Mac. The signs that this percentage is holding, and even growing, is a very positive sign for Mac all around.

The company reminded analysts that it had over 1 million Bootcamp downloads, the software that allows users to dual-boot Windows on their Apple machines, and that it had plans to further integrate Bootcamp into their software. This is no doubt an important part of the reason many felt comfortable enough to make a switch to Mac.

Tobias Buckell is an author, freelancer, and professional blogger. He owns shares in Apple.

Circuit City selling Apple products again

Back in the day Circuit City used to sell Apples. But Apple in retail situations fell into a funk. With larger cuts on the PCs sellers would steer buyers away, and there was a great deal of customer confusion about what Apple products could do and couldn't do. Apple Computer, Inc. (NASDAQ: AAPL) turned to creating its own retail experience with the Apple stores. Initially dismissed, the stores have done much to help educate the larger world about Apple products and become part of the Apple comeback story, and the iPod has also buoyed the fortunes of Apple.

So does it make sense for Apple to partner up with Circuit City when Apple retail is doing so well? There are a couple reasons to say yes. One is that Apple's retail stores cater to people seeking out the Apple brand, whereas Circuit City allows people to 'encounter' the OS and computer for the first time by chance. Second, Apple stores can't be everywhere, so having their product in Circuit City helps market penetration.

Downsides? Circuit City is an unprotected environment with people who might have trouble answering questions about the Apple products like you find in an Apple store. I still, when visiting the nearest Apple store, hear confused customers asking if they are able to surf the internet and check their email on an Apple. A Circuit City employee should know to say 'yes' to that, but a more specific question about programs that could be run on the computer might get a blank look at Circuit City that would be easily answered at the Apple store.

Dell imitates Apple Stores, does not flatter

They say imitation is the sincerest form of flattery, but in some cases, it is just downright embarrassing. Case in point, Dell's attempt to imitate the success of the Apple Store with a Dell Store of their very own. Dell's only store, in Texas, is an odd creature. Despite claims that the store is not going to supplement or change Dell's direct sales strategy, it does exist. Why? Will there be more Dell stores? Does Dell even know what it is doing here?

Before the Apple store a number of computer manufacturers were trying this model and failing. This was one of the reasons everyone predicted Apple Retail would also fail. But it seems style and shopping experience play into people's decisions to show up, and Gateway failed.

Has Dell learned a lesson. Well, the guy at IFO Applestore went and took a look and he doesn't think so, he thinks Dell is really confused. We won't have to worry about Dell challenging the Apple store approach anytime soon, will we?

[thanks to Chris Aloi for the photo]

Apple retail to expand into Australia?

Apple retail stores are popping up all over the U.S. -- as well as the U.K., Canada, and Japan. The stores function as a location for educating customers about the best the company has to offer, as well as providing a clean and well lit space to promote Apple products. The effect of an Apple store opening anywhere new is always to increase Apple awareness. It is pretty much a proven strategy by Apple.

Now it is rumored that Apple might be expanding its retail presence into Australia. A location in trendy downtown Sydney is being speculated about by ardent Apple followers. Certainly an Apple store in Australia's most famous city would be a smart move. The more marketshare Apple can snag the better. Many of these stores have a demographic of 50% 'new to mac' sales, so the more stores, the more new customers Apple gets. And that's a good thing.

[Disclosure: I own Apple stock at the date of this post]

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Last updated: February 11, 2012: 04:58 PM

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