updated 10:40 am EST, Mon March 5, 2007
Leopard to boost AAPL
Apple's next generation Mac OS X Leopard operating system could add nearly $200 million to Apple's revenues to its June quarter, according to one analyst. The company is expected to have an installed base of nearly 22 million customers by the end of the March quarter, according to analysts at Bank of America Securities. That figure is up by 6 million users since the release of Mac OS X Tiger, the last major revision to the company's operating system, nearly years ago (June 2005). Analyst Keith Bachman told clients that Apple's operating system releases are amongst the most lucrative for the Cupertino-based company, with gross margins that range upwards of 90 percent, according to AppleInsider. "At the time of product launch, Apple capitalizes the cost of software development and amortizes such cost over three years, meaning the Apple's profit margins are very high at the time of product launch," he explained.
The firm forecasts that the combined sales of Mac OS X 10.5 Leopard and the expected iLife '07 digital lifestyle suite of consumer applications will generate approximately $200 million in incremental revenue for Apple, compared to the $135 million earned from sales of Mac OS X Tiger. The extra revenue could add 7-9 cents a share in the June and September quarters combined, he told clients.
Bachman said he sees the March quarter in-line with expectations at the revenue line, but with a potential upside to consensus estimates on EPS due to the ongoing erosion of NAND flash memory pricing, according to Seeking Alpha.
Bank of America Securities rates the stock a Buy, with a price target of $107.