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To: joseffy who wrote (39009)	1/22/2009 10:01:42 AM
From: Rangle	Read Replies (1) \| Respond to of 48461

fwiw AAPL had a great qtr in spite of dismal economy Apple: Color on qtr (82.83 ) : Kaufman notes despite strong macroeconomic headwinds, Apple was able to execute and surprise, reporting stronger-than-expected December quarter results last night driven by iPods and Macs. In their view, there were three surprises in the quarter: 1) gross margin came in at 34.7% vs. 30%-31% guidance and their bullish 31.7% view, due to favorable component pricing; 2) iPods were much stronger than expected at 22.7 mln units (above their optimistic view of 19 mln and Street expectations of approximately 18.5 mln); and 3) international drove the upside. As expected, its March quarter guidance was vintage conservative but much better than feared with speculation that it could be as low as $1 bln below consensus (similar to last quarter)... Oppenheimer says AAPL defied expectations, as the strength of its product cycle provided a measure of protection against the deteriorating global economy. While they're reducing their EPS estimates to reflect a lower interest rate environment and the likelihood of a longer, deeper recession, they're encouraged by the signs of fundamental stability in Apple's business. Mac is gaining share, iPhone sales remain strong, iPod is showing surprising resilience, FCF is stellar, and it's now at $31 of cash/shr. Apple provided little new information on the executive management front. But they say COO Tim Cook gave an impassioned and compelling argument about the internalization of the Jobs ethos at Apple... Citibank notes given favorable input pricing, a growing contribution from higher margin iPhone revenue and lack of product price cuts, it now seems very clear that Apple will materially exceed its FY09 gross margin guidance of 30-31%. While they had expected 4CQ08 gross margin to exceed management's guidance of 30-31%, margins were several hundred basis points above their estimate and 370-470bp above mgmt's guidance due to favorable component pricing, lower freight and warranty costs and several non-recurring items. Despite this morning's rally, valuation continues to look attractive and they reiterate their Buy rating and raised their tgt to $147 from $132. They remain buyers despite today's strength.