Here are my projections for 4th Quarter - lets have some serious comments from all !
They will cut $500m expenses, $125 per quarter, from last quarters base of $372 Selling & $149 R&D = $400million.
Sales average for the last two quarters is about $1.9B. I've averaged because they stuffed the channels in 1st Q and suffered in the 2nd. By the 4th Q they will benefit from full (and monopoly) production of Powerbooks and newer 300-533MhZ CPU's, so I am predicting $2.0B to $2.4B sales.
Gross Margin has varied substantially, but with higher portion of business being upper end, System 8.0 upgrade revenue, and possible bumps in licensing fees, the expected range is 20%- 25%. This would generate gross profit of $400m to $600m. After $400m expenses, that translates to pre-tax bottom line for the quarter of $0 to +$200 so an average of $100m. This is about $70m after tax or 0.56 per share FOR THE 4TH QUARTER !
If they produce these results I would expect estimates for Fiscal 98 earnings to be at least $2.50 given the intro of Rhapsody and a stock price of 15-20 times earnings = $37 to $50.
I think I have left out some positives, so I remain very optimistic! The worst case appears to be a break-even which means no change in stock price with a "wait-and-see-Rhapsody" attitude, as AAPL is hardly trading over book now. My only fear with Rhapsody is (1) missed deadline, and (2) developer support, particularly from Adobe who appear to be reluctant to invest !
GOOD LUCK TO ALL ! |
