Ben Reitzes analyst for UBS have recently had a meeting with multiple Apple execs to discuss future prospects for Apple and to cover topics ranging from component cost environment, new Mac computers and the iPhone.
In attendance with the UBS analyst were the following Apple executives, Peter Oppenheimer (Chief Financial Officer), David Moody (Vice President of Mac Product Marketing), and Eddy Cue (Vice President of iTunes).
"While Apple obviously did not reveal any new products, management still seems very confident in its market position in music and its ability to drive the 'multiplier effect' in various other businesses including Macs, iPhones and much more to come," wrote the UBS analyst. "We believe Apple is in great shape in terms of product momentum and believe the shares should benefit in what could be an extremely strong year that should be punctuated by another exceptional December quarter."
When discussing the iPhone the analysts noted that the Apple execs seemed "confident the product will ship on time with volumes to meet customer demand." UBS is expecting "initial [iPhone] demand to be very strong."
"We believe Apple will provide customers with an innovative method of in-store activation and in-store displays for the iPhone, along with customer-friendly billing that could tie customers further into the Apple online store," the analyst wrote. "We believe Apple will introduce new models and partners for the iPhone in Europe and Asia within a year."
Moving onto the Apple TV the analyst wrote that the product "could be huge" and several growth opportunities available.
"We really enjoyed our meeting with Eddy Cue, being it was our first time meeting him," wrote the analyst "Eddy Cue clearly believes this product is the next generation DVD player for the home."
"As a result, we believe that Apple TV could be a $1 billion ecosystem for Apple within a few years."
During the meeting the analyst looked to the future questioning execs on new products and current product sales. The analyst believes that Macs could see an increase in sales during the June quarter due to the release of Adobe Creative Suite 3 and a new Final Cut Studio.
"We believe new products should help stimulate revenue acceleration through fiscal year 2008 for Apple and it seems management is very confident in its secret pipeline," he wrote. "For the rest of calendar 2007, we expect new video iPods including a widescreen video iPod with multi-touch technology (likely flash), higher capacity nanos and shuffles and new Macs into the holidays."
"We remain excited about Apple’s new multi-touch ecosystem the 'Mega-Platform' as we call it, and believe it may be becoming an 'open-ended' story once again with a logical chronology of new products for years to come," the analyst reiterated. "We expect the 'MP' to be prevalent in each of Apple’s major hardware products within 3-5 years."
Following the meeting the analyst estimated that Apple's gross margins will average 32.1 percent in fiscal 2007 (up from 29 percent in 2006) and fall to 29.4 in fiscal 2008.
The analyst also noted that past estimations of Apple may have been too conservative, for Apple's third fiscal quarter ending June the analyst is forecasting earnings-per-share of $0.70 showing revenue growth of 20 percent year-over-year to $5.22 billion.
For all of fiscal 2007, the UBS analyst is modeling earnings-per-share of $3.53, reflecting revenue growth of 23 percent to $23.7 billion, gross margin of 32.1 percent and operating margin of 16.9 percent. The estimate factors in iPod unit growth of 34 percent to 52.7 million, while our Mac unit estimate calls for 6.7 million units.