updated 10:10 am EDT, Thu April 24, 2008
AmTech: 'Mixed' outlook
Apple's second-quarter financial results -- announced yesterday in a conference call -- may have been strong in many regards, but the company's outlook in terms of stock value is "mixed," writes Shaw Wu of American Technology Research. Wu notes that Apple is providing guidance of $7.2 billion for the next quarter, an improvement over consensus views of $7.16 billion; EPS predictions remain conservative at $1 instead of the consensus $1.10, however, and gross margin for the last quarter was only 0.9 percent higher than a guidance of 32 percent -- well below the consensus expectations of 34 percent.
Wu says this may be a point of major concern for investors, as the company may have of "lost" its ability to exploit dropping component prices. Typically, Apple charges customers a margin considerably higher than many other companies.
The long term may be more appealing, as AmTech is now forecasting FY08 revenue of $32 billion with a $5.25 EPS, up from a previous estimate of $31.3 billion and $5.15; for FY09 figures of $37 billion and $6.15 are suggested, a jump from $35.6 billion and $6.05. With this said though, Wu is standing by his switch to a neutral rating for Apple stock, as the risk/reward is said to be too high in trading at 30x CY08 EPS (26x ex. cash). There may also be "vacuums" before the release of 3G iPhones and new Macs.