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

To: Richard Habib who wrote (17000)	8/20/1998 4:19:00 PM
From: Andrew Danielson	Read Replies (1) \| Respond to of 213182

<<I'm assuming increase in revenue qtr to qtr is similar to increase in earnings qtr to qtr. Any reason why 16% increase would be badly inaccurate??>> Actually, this is not true. Revenue goes up proportionally with EPS only given two things: -Margin must remain exactly the same -Operating costs must go up proportionally as well While the margin is arguable, it is extremely unlikely that operating costs would proceed proportionally higher. To illustrate; Q1 to Q2: Revenue was down 12.3% while costs went down only 4.8%. Q2 to Q3: Revenue was flat while costs went down 2%. Going back further to look at FY 97, one sees the gamut run from costs and revenue moving in opposite directions to a 4:1 ratio of revenue movement to cost movement. I do not expect costs to rise even near to 16% for Q1. Therefore, a 16% revenue increase would result in a greater-than 16% increase in EPS profits. Furthermore, I have reason to believe that we may see an even greater than 16% increase in revenue for Q1. Not only is it normally a very busy time of year (as your statistics indicate), but it happens to correspond to other things that could boost revenue. 1: OS 8.5 will be released during Q1. OS 8.0 had a material impact on revenue, and I expect 8.5 to do the same (especially given the advanced word on how much faster the betas are running than 8.1) 2: iMac production and media blitz will be full-throttle for the whole quarter. If we can get anywhere near to 400,000 shipped this quarter, then I shudder to think what will happen in Q1. 3: We can expect the problems surrounding Powerbook supply to be resolved by the time Q1 rolls around. One persistent rumor (see O'Grady's PowerPage) is that Apple is about to introduce replacements for the 292 high-end machine that utilize the 333 and 366 mhz low-voltage chips from Motorola. 4: Q1 will also see the brunt of sales from the soon-to-be speed-bumped desktop G3's (the 333's and 366's.) Plus, margins should hold up well because of the high-end Powerbooks and G3 desktops that offset the lower iMac margins. Andrew

To: Richard Habib who wrote (17000)	8/20/1998 9:41:00 PM
From: Phillip C. Lee	Read Replies (2) \| Respond to of 213182

Richard, There is nothing wrong to be conservative like you. However, I'd just like to point out that this quarter is always one of the best two quarters from Apple's historical data and hence it even doesn't encounter the success of iMac sales, the net/revenue constantly exceed previous two quarters. We've $0.50 net in the previous quarter, and your estimate is likely to exclude iMac's successful sales. Even Jobs have mentioned revenue growth and market share are going to be the case after he saw the popularity of iMac. Remember, there is always around 50% of total iMac sales volume that will come from international markets, where nobody really seriously encounter those numbers yet. The iMac sales in Japan on August 29th will catch just in time before back-to-school season, its sales in Austrialia and Euorpe around Sept. 5th, will boost another significant volume before the quarter end. If we get 400,000 units sold, then theoretically Apple only needs to sell 200,000 in US to reach that amount. Can Apple sell 200,000 in US and 200,000 in foreign countries? The answer is obviously positive. Phil