Apple to meet, possibly exceed guidance

Apple will likely report results at the upper-end of or even exceed its guidance of $4.5-4.6 billion in revenue and $0.46-0.48 in earnings-per-share, according to American Technology Research senior analyst Shaw Wu. "We anticipate continued strength in its Mac business (up 6 percent quarter over quarter) driven by MacBook and a rebound in its iPod business (up 5 percent quarter over quarter) helped by new Nanos and initial shipments of its new Shuffle." Wu believes Apple will guide conservatively for the December quarter due to the company's preference for setting reasonable expectations and tough year-over-year iPod comparisons. "For revenue, we believe Apple will likely guide to $5.7-6.1 billion (we are at the upper end at $6.0 billion), up 25-31 percent quarter over quarter." American Technology Research maintains its "buy" rating on Apple shares with a price target of $91 based on strong competitive advantage and growth prospects in large-cap technology.

Additionally, sell-side consensus for Apple is -- as usual -- unreasonably aggressive at $6.5 billion, according to Wu, who sees a potential soft reset in December quarter estimates that may result in a pull-back in Apple shares.

"With a potential soft reset in December quarter sell-side estimates, Apple shares will likely see a pull-back," Wu said. "We maintain our buy rating as we advise investors to take advantage of this weakness and aggressively buy Apple in the high-$60s as we believe Apple remains among the best positioned technology companies."

The analyst also expects several key catalysts for the Cupertino-based company in the near future, which include: The launch of iTV in the March 2007 quarter; movie content partnerships beyond Disney; a new widescreen video iPod in the first half of 2007; Core 2 Duo upgrade cycle boosting Mac sales; and the debut of Apple's first cellular handset.

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