MacBook release builds confidence in Apple\'s quarter

"MacBook is shipping 1-2 months ahead of our checks (we had anticipated the June/July timeframe)," analyst Shaw Wu told clients in a research note issued on Thursday. "We thus have a higher degree of confidence that Apple is on track to hit the upper-end, if not exceed, its guidance of $4.2 to 4.4 billion in revenue and 39 to 42 cents in earnings-per-share."

Wu sees the timing of the MacBook launch as important because it comes well ahead of Apple's critical back-to-school buying season, which begins around the July timeframe. He believes the notebooks are on their way to becoming the company's second highest volume Mac computer behind the iMac Core Duo, possibly making a run for the No. 1 spot.

"Pricing and specifications appear very competitive and a vast improvement from [the] iBook, its predecessor," the analyst wrote."We believe the entry-level system from $1099 is a particularly good deal that includes a 1.83GHz dual-core Intel processor, 13-inch widescreen LCD, 512MB of memory, 60GB HDD, iSight video camera, Front Row with Apple remote, GigE, Wi-Fi, Bluetooth, Mac OS X Tiger, the iLife suite and the option to run Windows XP through Boot Camp."

Wu says the new MacBook "screams iPod companion and portable digital media center." While it's clear that Apple is targeting students and the education markets with the notebooks, they also make "a lot of sense for mainstream consumer, particularly switchers," he said.

Unlike Apple's professional line of MacBook Pro notebooks, Wu said the availability of the new MacBook appears fairly good in its first week on the market. "Our checks indicate strong orders and pent-up demand as many customers have been waiting for this low-cost Intel mobile Mac," he wrote. "In fact, on Amazon.com, the top three selling PCs are MacBooks, beating out Toshiba, HP, Sony and Acer."

Still, the analyst has his share of concerns. He believes the the $1499 high-end version with a black matte finish may be a bite overpriced. "Apple appears to be confident that some customers will pay the $200 premium for the black color," he wrote.

Another concern is that the MacBook's feature set and attractive price points could deter users from purchasing the company's higher-priced MacBook Pro offerings. "The MacBook is so powerful that we fear it could cannibalize sales of its high-end MacBook Pro," Wu told clients. "The only difference between the models are the screen size (15-inch and 17-inch vs. 13-inch) and graphics capability (ATI vs. embedded Intel graphics)."

Overall, Wu remains bullish on Apple. He believes the risk-reward on the company's shares remains attractive, trading at 25 times his 2007 calendar year earnings-per-share estimates of $2.59. "We remain firm believers that the move to digital entertainment is a multi-year trend and that Apple is well-positioned to capitalize with its unique and defendable iPod + iTunes and Macintosh franchise," he wrote.

American Technology Research maintains its Buy rating on shares of Apple with a price target of $101.