Firm weighs in on Apple\'s March quarter, future guidance

Based on a recent analysis of Apple's retail channels the firm expects slight upside to Wall Street estimates of 24 cents per share on revenues of $3.17B.

However, PiperJaffray cautions that the Street estimates for iPod unit shipments have become over-aggressive due to activities seen from component suppliers during the quarter.

"While clearly a critical piece of the overall picture, due to iPod shuffle supply inconsistencies in the quarter, we believe it is prudent to focus on overall March quarter results and June guidance," Senior Analyst Gene Munster wrote in research report released to clients on Monday.

The analyst said checks with 20 Apple specialist VARs offered confidence that demand for Apple's key products — namely iMac, Powerbook, Mac mini, and various versions of the iPod — were solid during the quarter, with the exception of the Power Mac G5.

"This was the most positive we have heard the channel in the last 3 quarters, with 35% expecting March quarter above

plan," Munster said. "Any complaints were primarily related to lack of supply of Mac mini and iPod shuffle and weak sales of Power Mac."

For the June quarter, PiperJaffray expects Apple guidance will be above Street consensus of 23 cents on $3.20B in revenue, based on continued strong demand being met by more consistent supply of the company's most popular products.

Looking further down the line, the firm said Apple's domination in digital music will play a critical part in its success story, but should not be seen as the only potential growth avenue for the company.

"Indirectly, we expect iPod to be a foundation for growth in other parts of Apple's business," Munster wrote. "We expect that by the end of CY05 more than 30 million iPods will have shipped, providing Apple with a greater scope of awareness for various products."

PiperJaffray maintained its "outperform" rating on Apple with a price target of $50 per share.