| | Earnings on Wednesday...WALL STREET analysts, who barely blinked at the recent delay in an upgrade of the Macintosh's computer operating system, see Apple handily beating projections management issued at the start of the quarter. Macs and iPods continue to sell well, and the iPhone is on the way.
Earnings Outlook: Apple projected a fiscal second-quarter profit of 54 cents to 56 cents a share. Analysts, labeling the company as conservative with its forecasts, expect 64 cents, according to Thomson Financial. Net income in the year-earlier period was 47 cents a share.
Revenue Outlook: Apple projected as much as $4.9 billion, compared with $4.36 billion a year earlier. Analysts are expecting $5.17 billion.
KEY ISSUES:
Computer sales: With the Mac's new Leopard OS pending, American Technology Research sees quarterly sales coming in a bit "light" at 1.4 million units, but that's still up more than 25% from a year earlier. The launch delay itself -- from June to September -- mostly shifts around income, analysts say.
IPods: Apple's recent announcement that the 100 millionth iPod had shipped prompted Citigroup analysts to pare back their estimate for the latest quarter to 10.8 million units -- but again that's more than 25% year-over-year growth. They also say iPod inventory levels seem under control.
Margins: Even while reining in Mac and iPod expectations, analysts have raised their earnings estimates due largely to lower component prices. Citigroup sees Apple's gross margin breaking through 32%, from 31.2% in the preceding period.
Improvising: Apple's iTunes is music-download leader but continues to fiddle with its pricing in order to induce more song purchases. It also struck a deal with EMI to make most of the music publisher's catalog available free of antipiracy software.
Source: The Wall St Journal |
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