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Apple expected to beat Wall Street's Q4 estimates

Despite slower than expected iPod sales during the better part of its fourth fiscal quarter, Apple Computer is still likely to beat Wall Street's consensus estimates due to strong Mac sales, says one analyst.

PiperJaffray analyst Gene Munster on Thursday said checks with Apple specialist stores and an overview of NPD iPod data leads him to believe the company will report "slight upside" for the quarter. The Street is expecting earnings of 50 cents a share on revenues of $4.67 billion.

Similarly, he expects the Cupertino, Calif.-based Mac maker to guide in line with Street exceptions of 77 cents earnings-per-share on revenues of $6.46 billion for its first fiscal quarter of 2007.

"Current Street consensus revenue implies 39 percent quarterly growth [for the fourth fiscal quarter], which we believe is conservative given last year Apple grew revenue 56 percent quarter-to-quarter in the December quarter," Munster wrote in a research note.

The analyst said he has analyzed the first two months of NPD data (July & August) for the fourth quarter and found that it suggests iPod unit sales will come in around 7.4 million units.

"When the third month of data is released, our analysis will likely lead to a different iPod unit figure than what our analysis suggests based on the first two months of data, given data for the month of September will include data related to the new iPods that are now shipping," he explained. "Given the new iPods that were just recently announced, we believe iPod units will end the quarter closer to Street expectations, but still shy of 8.6m."

As a result, the analyst lowered his iPod estimate from 8.6 million to 8.2 million for the fourth quarter.

Meanwhile, Munster expects fourth quarter Mac sales will slightly exceed Street consensus of 1.47 million units. "We recently did channel checks with 15 U.S. Apple specialist store resellers, which suggested Mac sales were above expectations in the September quarter," he told clients. "Specifically, more than 50 percent of specialist stores in our sample said that Mac sales for the quarter exceeded expectations and 73 percent indicated that they sold more MacBooks than expected."

Moreover, Munster said, Mac NPD data for the quarter implies strong yearly growth, driven by solid back-to-school spending.

"Given the positive nature of our checks and NPD data, we are slightly raising our September quarter Mac unit estimate to 1.49 million from 1.44 million," he added.