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AAPL Stock: 100.53 ( + 1.37 )

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Apple shares up 4.5%, earnings due

updated 03:10 pm EDT, Fri April 18, 2008

Apple shares up 4.5%

Shares of Apple Computer Inc. are up $6.51 to $161 near the end of trading on friday, representing a gain of 4.21 percent. The uptick could be due, at least in part, to strong market share gains posted by the company in recent surveys from various research firms. Apple saw the biggest gain among the top 5 vendors in the U.S. market according to Gartner, enjoying strong retail sales coupled with "decent growth" in the professional market. According to IDC, Apple is expected to come in at fourth place and ship 950,000 Macs to Americans during the first quarter of 2008, earning itself an increase from 5.7 percent in the prior quarter to 6 percent. The increase is a 25.1 percent jump over sales in early 2007 and also represents more than a full percentage point increase in marketshare from year to year.

Apple is due to report earnings for its fiscal second quarter on April 23. MarketWatch reports that FactSet Research currently estimates that Apple will earn $1.11 a share on $6.97 billion in sales for the quarter. Apple previously forecast earnings of 94 cents a share on revenue of $6.8 billion for the quarter. Focal points will be iPhone and Mac sales.

Regarding iPods, the street expects iPod unit growth to be about 53 million in 2008, essentially flat year over year. Piper Jaffray analyst Gene Munster says "We disagree (with the street). We believe Apple can maintain iPod unit growth and slightly exceed Street expectations for the full year. While we do not believe the iPod will return to a high growth business (20%+), we do believe it will remain a growing segment (~10%)."




by MacNN Staff

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Comments

  1. Eldernorm

    Joined: Dec 1969

    0

    Why oh why??

    Why is anything only good if its accellerating like crazy.???? If iPods keep selling 30 to 50 million a year (not counting the Touch which is an iPod) they will keep the mp3 player market for years and years and years to come.

    Just a thought.

  1. climacs

    Joined: Dec 1969

    0

    re: why

    Wall Street tends to build future expectations into current prices - after all, everyone wants to be one step ahead in investing.

    Since Apple's share price already has really good growth expectations built into it, the 'froth' is where the radical price swings happen. That is, whether AAPL sells for $150 or $200 depends upon whether there is crazy outtasite growth in iPhone/iPod or merely really good growth.

    Since Apple always meets the expectations for really good growth, the somewhat high price for AAPL even at ~$150 is justified. It's simply a question of how insanely great the growth is, whether AAPL continues rising back towards $200 territory or falls back towards $130 or so.

    The recent big drop-off in AAPL from nearly $200 to a low of $120 was more a reflection of slowing iPod growth and economy woes. I happen to think that, while the iPod market is definitely maturing, Apple will continue to outperform other high-tech companies even in a slowing/recessionary economy simply because their products are so damned good. The iPhone is going to resist recessionary pressures and the utter failure of Vista is going to continue to help Apple grow Mac market share thanks to people fed up with Wintel PCs and switching to Mac.

  1. climacs

    Joined: Dec 1969

    0

    plus

    the more Apple does well in this recession - especially if other high-tech companies don't do very well - the higher AAPL will go (or at least not dip as much as other hi-tech companies) because it will look like a very safe place to put money if one wishes to invest in high-tech.

    That is, demand will push AAPL even higher. I bought more AAPL at $130 and I wish I had doubled down at $120.

  1. climacs

    Joined: Dec 1969

    0

    Munster has it right

    I'll go out on a limb and make a prediction about next week's earnings announcement. I think Munster is right; Apple will slightly exceed expectations on the street for Apple earnings. There will be a sell-off as people profit-take with the expectation that Apple revenue is going to be affected by the recession; I believe the recent run-up in AAPL is due to expectations of this somewhat strong showing next week.

    When that sell-off happens next week, you may have another buying opportunity, depending how low AAPL dips; I predict it will fall back towards $150 or maybe a bit below, though I would not buy AAPL unless it dives below $140 or unless you are looking to buy for the long-term.

    Nevertheless, Apple's future prospects are strong. And if Apple blows past expectations, you'll see a $10 upward bump in AAPL next week, if not more. But I don't think that's going to happen. What I do think is that Apple's prospects for the rest of the year are very, very good regardless of the economy, and iPhone version 2 is going to be huge.

    There. Feel free to flame me next week if I get it wrong.

  1. gskibum3

    Joined: Dec 1969

    0

    Why oh Why?

    Because Wall Street is irrational - especially about Apple.

  1. MeandmyMac

    Joined: Dec 1969

    0

    aapl tanks on pos. news!

    The last few times that AAPL beat Wall Street's expectations, Apples stock tanked. Don't know why. Selloff, not always, but during earning calls that turn out to be better then estimated by Apple or Wall Street, there stock tanks.

    If Apple reports are better than Apple forecasted and better than Wall Street pundits, why should, if good news abounds, this be any different?

  1. vasic

    Joined: Dec 1969

    0

    not quite so

    MeAndMyMac:

    When Apple reported in January (last time), sell-off was rapid because their guidance was lower than what the Street hoped. Previous earnings report was in October, and back then, Apple's guidance was surprisingly high; the stock went through the roof (beyond $190 for the first time in history). Prior to that, in July, similar thing happened. I'm not sure which last few times you're talking about.

    Apple will probably beat its guidance easily. It will most likely also beat the Street's expectations. AAPL will tank only if the guidance for the next quarter ends up disappointing the Street (which is what happened in January).

  1. testudo

    Joined: Dec 1969

    0

    Re: not quite so

    Apple will probably beat its guidance easily. It will most likely also beat the Street's expectations. AAPL will tank only if the guidance for the next quarter ends up disappointing the Street (which is what happened in January).

    Of course it will beat guidance. Apple has been using the same guidance concepts that most companies use (and MS used to its benefits for years): reduce expectations as much as possible, then report higher then expected data. Because we all know that no one likes it when a company just "meets" expectations (partly because everyone knows the game by now, so no one believes what a company says).

    This is also why Apple NEEDS to really exceed expectations. The street already know they'll beat expectations. Barely beating it will result in a large sell-off. And, as vasic says, the stock will tank if they also don't provide optimistic guidance.

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