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Demand for key Apple products ahead of expectations

In a research report released to clients on Tuesday, PiperJaffray Sr. Research Analyst, Gene Munster, said the response to Apple\'s key products in the March quarter continues to be ahead of his firm\'s expectations.

In the report, obtained by AppleInsider, the analyst cited strong demand for Apple\'s iMac, PowerBook, Mac mini, and various versions of the iPod.

Munster said he believes that \'true demand\' for the iPod shuffle and Mac mini will not be visible in the March quarter, but expects strong demand across various segments of the company to allow it beat the Wall Street\'s estimates for overall revenue and earnings. More importantly, he claims, an easing of supply constraints over the next few months will also help Apple surpass current Street estimates for the June quarter.

Although the Street is placing a significant emphasis on iPod unit shipment figures —and what these may or may not amount to —Munster said his firm is focusing on Apple\'s overall business, having just completed a round of 50 channel checks. This included interviews with 20 Apple Specialist Resellers and 30 Apple retail stores. His findings were mostly positive.

Munster said resellers are more optimistic than they have been in the last three quarters, despite inadequate supplies of iPod shuffles and Mac minis. 35% of these resellers said they expect their March results to come in ahead of plan, compared to 27% for the December quarter.

\"In general, things just haven\'t slowed down really at all following the holidays,\" one reseller told the firm. Meanwhile, another reseller jested: \"Apple is not shipping us much; if I could get all of the products I need to fill demand, I could pretty much retire right now.\"

Resellers indicated they are seeing the impact of the iPod \'halo\' effect, with some customers coming in to purchase an iPod and leaving with an iMac or Mac mini. A handful of resellers also noted that they are seeing Windows PC switchers moving to the Mac mini.

In its interviews with 30 Apple retail stores, the firm found iPod shuffle demand to be unprecedented, while demand for Mac mini remained strong, but not overwhelming. The average supply of iPod shuffles per retail store is currently between 30 and 50 units, the firm said, but noted that \'meaningful\' supply of the players has only been available at most stores within the last 10 days.

\"We are averaging one phone call every 2 minutes and nearly every call is related to iPod shuffle availability,\" one Apple store representative told the firm.

For the March quarter, PiperJaffray is modeling shipments of 3.75 million iPods, which includes an estimated 1 million shuffles. In the June quarter, the firm expects Apple to ship over 4.55 million iPods, including 1.8 million shuffles.

In this most recent research report, the firm did not comment on Apple\'s iBook product line, but noted that Power Macs are receiving the softest response out of all the offerings present in Apple\'s product matrix.

PiperJaffray increased its fiscal year (FY) \'05 and \'06 earnings-per-share estimates 6 cents and 2 cents, respectively, to $1.04 and $1.18. These forecast changes include revenue estimate increases of over $550m for FY05 and $175m for FY06. The firm now expects Apple\'s FY05 revenue to exceed $12.8b, while modeling the company\'s FY06 revenue in excess of $14.4b.

PiperJaffray reiterated its \'Outperform\' rating on Apple with a price target of $50 per share.