Expectations too high, says firm

Kaufman Bros. is sticking with its current predictions on Apple performance ahead of the company's fourth-quarter results call, says an analyst for the firm. Shaw Wu notes that although the firm raised its estimates above consensus about two weeks ago, consensus has since raced ahead again -- perhaps too far -- and now sits at $9.2 billion in revenue with EPS of $1.42. Kaufman figures are $9.1 billion and $1.41.

Apple is expected to announce shipments of 11 million iPods, 6.8 million iPhones, and 2.8 million Macs; these numbers are above consensus estimates in all areas, except for the iPhone, which is more widely targeted to hit 7 million. Wu argues that Apple could do particularly well if helped by a recent iPod refresh, and a profitable gross margin, which could hit 35.2 percent for Q4. Gains in margin are likely to be driven by Snow Leopard and the iPhone, though they are also being hampered by price cuts and higher component costs.

Investors are warned to be ready for short-term problems in Apple stock, potentially linked to "exaggeration or urban legend," according to Wu. The company is forecast to do well in the long-term however, such that dips based on Q4 earnings may be seen as an opportunity to buy. Looking ahead to the December quarter, Kaufman is calling for $12.1 billion in revenue, with $2.02 in EPS; consensus currently points to $11.5 billion and $1.91.

by MacNN Staff