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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GS_Wall Street who wrote (6625)	12/5/1997 3:42:00 AM
From: Eric Yang	Read Replies (2) \| Respond to of 213173

I think the analysts estimate that Apple will post -$0.07 per share or a loss of approximately $8.8 million. The question is whether or not we can beat this number. Excluding charges, Apple lost $24 million last quarter on revenue of $1.6 billion. Apple's revenue has decreased steadily in the last two years so I have a feeling that a $1.8 billion revenue (or 12% increase over previous quarter) may be too optimistic. Surely the introduction of G3,aggressive promotional programs, and lack of clone competition must have increased sales, however there are some issues that concern me: 1. I suspect that sales in October was relatively flat as potential buyers wait for the new machines. 2. There may not have been enough time between Nov.10th and Dec 31 (45 days) to significantly increase revenue. 3. OS 8 unit sales should decrease significantly compare to last quarter. International sales of OS 8 should increase in Jan as the OS is localized but may be too late for this Q. 4. The average price of Mac is becoming lower. Thus even if the number of unit sold increases the revenue may not. Many buyers may have substituted the purchase of 8600 with much cheaper G3s. 5. Apple charged $75 million last quarter to pay for PowerComputing deal...there are still $25 million to go? Even with revenue being flat at 1.6 billion. I think there is a good chance that Apple can turn a small profit this quarter. Operating expense should continue to decrease but don't expect the $40-50 million per quarter reduction rate because of promotional expense associated with X-mas season, CompUSA deal..etc. I think this positions Apple near the break even point this quarter. If it wishes to it can probably tap into the restructuring reserve to show a profit. I can use Apple Recon's famous shotgun approach and give some cryptic implications and numbers and pretend I know what I'm talking about. But to be honest I really have no idea what the earnings result would be. We can quesstimate with what we know but there remains many variables and unknowns in the equation. My gut feeling is that if Apple makes a profit this quarter it would be less than $10 million or less than $0.08 per share. Eric