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Technology Stocks : Apple Inc.

AAPL 259.35

+0.1%

Jan 9 9:30 AM EST

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To: Augustus Gloop who wrote (15724)	7/16/1998 3:58:00 PM
From: Jon	Read Replies (2) of 213181

S&P just upgraded AAPL!! NEW YORK, Jul. 16 (Standard & Poor's) - Standard & Poor's upgraded Apple Computer (AAPL) to 3 STARS (Hold) from 2 STARS (Avoid) after the company posted better than expected third quarter results following Wednesday's market close. AAPL posted third quarter operating earnings per share (diluted) of $0.50 versus a year-earlier loss of $0.44 per diluted share as lower costs offset a 19% drop in sales. S&P analyst Megan Graham-Hackett said the earnings beat both Wall Street's mean estimate and her $0.33 forecast. She noted that while the revenue drop was expected, a surprise was an increase in gross margin to 25.7% from the prior quarter's 24.8%, helped by strong high-end G3 and Powerbook sales and a lack of low margin consumer product. She said an impressive improvement in inventory turns to 22 times from the second quarter's 13 times means cash flow capability is much stronger than she previously expected. Nevertheless, shipments fell 8% to 640,000 units, and Graham-Hackett said she's still not convinced that AAPL will grow outside its stalled base. But with a big push for the new iMac in the consumer space, coupled with much improved operational efficiency, year-over-year quarterly comparisons will be positive during fiscal 1999 (Sep.), enabling the stock to be a market performer for the next six to 12 months. Graham-Hackett raised her fiscal 1998 earnings per share estimate by $0.17 to $1.57 (excluding a gain) and boosted her fiscal 1999 forcast by $0.20 to $1.75 on expectations of better gross margins and modest revenue growth resuming in the first quarter of fiscal 1999. personalwealth.com

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