Tuesday, November 30, 2010

Analysis Reflex of Apple's Black Friday Price Reductions

Apple looks set to be a big winner of the holiday shopping season kickoff, according to recaps of the Black Friday action from a number of analysts.

Doug Reid, Stifel Nicolaus: “We note strong demand at Apple stores we visited and 24-hour availability for online purchases on all 6 SKUs. Our analysis suggests AAPL’s Black Friday price reductions ($41 price cut on iPad) could reduce by an immaterial $0.01 to $0.03 our December quarter [earnings per share estimate] for AAPL (currently $5.21) due to lower [gross margin] on impacted product. Overall our checks indicate AAPL saw a strong Black Friday weekend leaving us incrementally more positive on the competitive position of Apple products heading into December holiday shopping.”

Rajesh Ghai, Think Equity: We believe the 5-10% discounts offered on most Apple products on Black Friday, considering the strong aspirational value attached to Apple products by most U.S. consumers, could potentially have had the effect of attracting the necessary customer attention and converting the customer desire into the requisite buying behavior for Apple during what is proving to be a stronger-than-expected consumer spending season.

William Fearnley, Janney Capital Markets: We believe the Black Friday winner is Apple, with hot new products like iPad/MacBook Air and their annual One Day sale prices. Sales and traffic appeared strong at the Apple Stores, as we expected … Apple sale pricing: One day Black Friday sale with discounts of ~$100 on Macs, ~10% on iPad/iPods and select accessories. Research suggests traffic was strong and sales were brisk. Apple emailed the promo beforehand too.

Shaw Wu, Kaufman Brothers: Despite modest discounts by AAPL itself, our field checks indicate strong foot traffic at AAPL stores and third-party retailers despite tough Y/Y comparisons. We found particular strong uptake of iPad, iPod and MacBook Air. While the Black Friday weekend typically accounts for approximately 10% of holiday sales, we nonetheless view it as a fairly
important indicator of trends.

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