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

To: 16bit who wrote (22556)	1/15/1999 12:58:00 PM
From: rhet0ric	Respond to of 213173

*The actual gain on sale was 32 million. Apple reduced earnings by 29 million to account for the 10% tax rate, so I reduced earnings by 22 million to account for a 30% tax rate. Apple is working through tax credits from its $1.7B loss. Until these are finished, they will be taxed at a lower rate. I'm sure their accounting is accurate. Motley Fool's point is that at some point those tax credits will run out, and then AAPL's earnings will be lowered; but we haven't reached that point yet. In short, it matters going forward in EPS projections, but not for the recent earnings announcements. Eric Yang's earnings spreadsheets include the changing tax rate, btw. You should check it out at: macevolution.com rhet0ric

To: 16bit who wrote (22556)	1/15/1999 1:17:00 PM
From: Jonathan Bird	Respond to of 213173

Well, my little HP12C says that 123 million divided by 172 million is .715 or 71.5 cents EPS. How did Apple come up with 78 cents? When calculating diluted eps you must first add back to pre tax income the interest payments that would have been saved if the convertible notes had been converted to shares at the beginning of the period. Your right about the tax rate thing. For an accurate comparison you should figure AAPLs profits as fully taxed. Jon Bird

To: 16bit who wrote (22556)	1/15/1999 1:54:00 PM
From: HerbVic	Respond to of 213173

While it may be reasonable to consider the full tax rate in evaluating the company's future earnings potential, applying that rate to current earnings is inappropriate at best. The earnings to which the higher tax rate will be applied will likely be considerably higher, as there are many events potentially accretive to earnings this year. The only reasonable way to consider P/E as an investment guide is to compare P/E past with P/E future (projected earnings), and personally evaluate the accuracy of P/E future based on assessing the fundamentals of the market and the company's ability to compete effectively. After all, it is 'reason' which is sought in making an investment decision. Trying to apply a future event to current earnings creates noise and moves away from clarity. HerbVic

To: 16bit who wrote (22556)	1/15/1999 2:13:00 PM
From: Eric Yang	Read Replies (4) \| Respond to of 213173

"Well, my little HP12C says that 123 million divided by 172 million is .715 or 71.5 cents EPS. How did Apple come up with 78 cents?" 22.6 million of the 172 million shares figure you are using are from convertible notes and must be treated differently. When assume conversion there is the dilutive effect of extra shares but there is also anti-dilutive effect of interest savings of $10.8 million per quarter. The net effect slightly dilutive. To calculate earnings per share you would add back the interest of 10.8 million and divided by 172 million. (123+10.8)/172 = 78 cents per share. Fred Anderson had an interview on Bloomberg. The recording of the conversation is available to those who subscribes to the service. He commented on Q1 earnings and shed more light on channel inventory question and basically stated that channel inventory was not an issue. I've been sick every since I got back from the Expo but I'd like to write an short article on this whole inventory issue over the weekend if I get a bit better. Q2 outlook would also be something interesting to talk about. I certainly don't agree with some of the analysis out there that says Apple will miss the estimate this quarter. The new Apple Investors section of MacEvolution is now online with its own easy to remember domain at appleinvestors.com Eric