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Technology Stocks : Apple Inc.

AAPL 273.81

+0.5%

Dec 24 9:30 AM EST

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To: David Semoreson who wrote (12459)	5/1/1998 12:21:00 PM
From: Eric Yang	Read Replies (4) of 213177

The current analyst estimate on a diluted basis is 30 cents (about $44 million), which is up from 24 cents a couple weeks ago. To meet the 30 cents/share estimate Apple needs to have revenue = 1405M (flat revenue) margin = 23.3% (margin at about 23% as promised) interest = 9M foreign tax provision = 3.2M cost = 290M (lower by 8M) 1405 x 23.3% + 9 - 3.2 - 290 = 43.5M After Marc cautioned me not to be overly optimistic on Q3, I took a hard look the numbers over the past few days. Having done so, I came to the conclusion that it is very unlikely that revenue will be as low as 1405M and margin will be as low as 23.3%. In fact I think revenue should come in at over 1520M and margin should remain at 24.8% range. 1520 x 24.8% + 9 - 6.5 (tax) - 290 = 89M I know, 89M sounds a bit high. But if Apple manage to ship both AIO and WallStreet in volume, 1520M and 24.8% margin are very realistic numbers. I looked into the numbers for Powerbooks. Apple earned $410 million in Q1 98 from PowerBooks. In Q2 98 that number dropped to $182 million. The drop in Q2 shouldn't be a surprise since many of us have reported the low inventory of PB in the channel. If Apple isn't shipping them, it's not earning the revenues. With the lack of PB inventory in the channel and intro of WallStreet to satisfy that demand, the revenue from PowerBook should jump in Q3. The question is how much? As long as Apple doesn't run into any production problems with the new WallStreet, I think an increase of $100M in PB revenue from $182 to $282 would be fairly conservative considering the market demand was at $410 million in Q1 (Christmas). Thus as long as the G3 revenue hold its own with a little bit of help from the new AIO, we shouldn't have any problem seeing revenue top 1500 million. I'll talk about margin at a later time. Eric

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