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Thursday, October 15, 2009, 05:15 am PT (08:15 am ET)

Apple expected to report record sales of 2.8 million Macs

Apple is due to report its quarterly earnings on Monday, and the Mac maker is predicted to exceed Wall Street expectations with blockbuster Mac sales, according to two research notes released Thursday.

Apple's previous best came a year ago, when it sold 2.6 million Macs during the September quarter. But analysts believe that the company will exceed that mark when it reports its earnings. The call is scheduled for Oct. 19 at 2 p.m. pacific time (5 p.m. eastern) Both Gene Munster with Piper Jaffray and Mike Abramsky with RBC Capital Markets believe a strong fourth quarter will help to propel AAPL stock over the $200 milestone within the next 12 months.

Piper Jaffray

Munster, senior research analyst with Piper Jaffray, raised his estimates on Mac and iPhone sales. He believes the company will report sales of 2.8 million Macs, and 7.5 million iPhones.

Recent NPD estimates predicted Mac sales increased 7 percent year-over-year for the first two months of the September quarter. Munster said that is above Wall Street consensus of 5 percent.

Piper Jaffray's checks of iPhone 3GS supply have found that demand has made it hard for Apple to keep the device in stock globally. Overseas, wireless carrier 3 Italia has indicated that it is selling 20,000 iPhones per month, but could sell twice that if it had the supply.

"While supply constraint is an issue near-term," Munster said, "we see it as a long term positive, as worldwide demand appears to be very strong for the iPhone 3GS."

Munster believes Apple will report earnings per share of $1.37 and revenue of $9.1 billion.

For the coming quarter, Apple traditionally gives investors conservative guidance, with an average of 4 percent below Wall Street expectations for revenue. Munster believes that pattern will continue when Apple reports next week. The firm has maintained its overweight rating and price target of $235.

Piper Jaffray


RBC Capital Markets

Analyst Abramsky predicted Mac sales to go even higher, with 2.9 million units shipped during the quarter. That would amount to a 10 percent year-over-year increase creating $3.5 billion in revenue. Proprietary data obtained through an RBC IQ/ChangeWave survey suggests 2 million of those units sold will be portable machines.

Mac sales are predicted to be particularly strong thanks to back to school sales. The recent survey of 3,100 respondents in early September found that 25 percent of those who purchased a PC in the last 90 days went with a Mac laptop.

Munster and Abramsky both agree on sales of 7.5 million iPhones for the September quarter. Abramsky believes that 5 million of those sold will be the high-end iPhone 3GS, and 2 million will be the $99 iPhone 3G.

"Though iPhone $99 3G sales have been slow in North America, where consumers have opted for the 3GS," Abramsky said, "we believe Apple is seeing healthy international (non-NA) traction of $99 iPhone in regions such as Europe, Latin America, and Asia, where consumers are more sensitive to handset pricing."

The RBC report also predicted that the iPod market will continue to shrink, as it is cannibalized by the iPhone and smartphones. Apple is forecast to have sold 9.9 million iPods for the quarter.

"Healthy upgrades" to Snow Leopard are also predicted to increase software revenue to $626 million, an increase 19 percent from last quarter. Abramsky believes 5 million copies of Snow Leopard were purchased during its launch window.

Abramsky also predicted that the new accounting rule change from the Financial Accounting Standards Board will boost first-quarter guidance on earnings per share 50 percent. Under the new rules, Apple is able to report all of its iPhone earnings up front, rather than spreading it out over the term of the contract for the device.

RBC Capital Markets has reiterated its outperform rating, and $250 price target for AAPL stock.

RBC Capital Markets