Wednesday January 7, 6:56 pm Eastern Time
Apple profit surprise psychological boost
SAN FRANCISCO, Jan 7 (Reuters) - Apple Computer Inc's surprise news of an expected profit in its first fiscal quarter was a big psychological boost for the company and its investors but Apple still faces enormous challenges.
''There are still a lot of challenges,'' said Todd Bakar, a Hambrecht & Quist analyst. ''The revenue and unit performance doesn't look like anything to write home about. They have made a lot of progress...but there is still a lot of work to do in terms of driving the engine and fueling the demand.''
Apple's future challenge is to try to grow its revenues.
Apple surprised investors and the Mac faithful at the MacWorld trade show on Tuesday with news that it would report a profit in its first fiscal quarter of over $45 million, while many on Wall Street had been looking for a small loss.
Analysts noted that Apple's expectations of revenues of $1.58 billion are below their forecasts for the first quarter and a 25.8 percent drop from the year-ago first quarter.
Apple shares jumped almost 20 percent on Tuesday, but on Wednesday fell 1-07/16 to 17-1/2 in active trading, after many analysts maintained their current ratings on the stock, while they tweaked estimates up to reflect a first quarter profit.
Some analysts said that the first quarter profits are due to benefits from cost savings from recent restructuring moves and there was a pent-up demand among current Macintosh owners for new products, resulting in good G3 sales.
''Conditions were probably more favorable in entering the September quarter than entering the March quarter,'' said Daniel Ries, a Nomura Securities International analyst. ''Evidence suggests that sales are limited to the installed base...With sales down 26 percent year over year, it's unlikely that they added any significant new users to their market.''
Apple will report its first quarter earnings January 14. |
