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Kaufman: Apple Q4 profits based on high-end products

updated 03:45 pm EDT, Tue October 20, 2009

Shoppers willing to pay for luxury of Apple?

People buying higher-end products are largely responsible for Apple's profitable Q4 results, says Kaufman Bros. analyst Shaw Wu. Apple generated $1.82 in EPS for investors, off $9.9 billion in revenue; both figures are well above prior Kaufman predictions, and still further above Apple's own guidance. Wu attributes the performance to several factors, such as Snow Leopard, cost discipline and component prices that were lower than expected.

The most important factor is said to be a shift towards higher average selling prices, contributing to a sizable gross margin of 36.6 percent. The public is willing to spend deeply on Apple products, according to Wu, including the most expensive ones, in spite of an economy in recession and overall industry trends towards buying cheap. People see Apple as being worth the extra money charged, the analyst concludes.

Wu is raising his price target for Apple stock from $214 to $235. Future aids to profits are expected to include additional Snow Leopard sales, the recent iPod refresh, updated desktop Macs and a "potential new form factor," likely referring to a rumored tablet device. FY10 is now projected to produce $41.7 billion in revenue, with $6.80 in EPS.

 
Previous Comments

ATTENTION PC FANBOIS AND APPLE-HATERS

10/20, 03:52pm reply

Suck... on... this:

The most important factor is said to be a shift towards higher average selling prices, contributing to a sizable gross margin of 36.6 percent. The public is willing to spend deeply on Apple products, according to Wu, including the most expensive ones, in spite of an economy in recession and overall industry trends towards buying cheap. People see Apple as being worth the extra money charged, the analyst concludes.

Microsoft... not so much.

climacs

Fresh-Faced Recruit

Joined: Sep 2001

+2

Not everyone buys cheap...

10/20, 04:33pm reply

America wasn't always this way. People preferred upscale goods if they could afford to buy them. This new American age of buying the cheapest c*** you can get still surprises me. It doesn't make sense at all. People getting educations to get better jobs to make more money and then turn around and buy some goods that look like junk, feel like junk and probably break in a short time would just doesn't add up. I only know that Apple doesn't have to appeal to the majority. If Apple can garner just 20% of the computer and smartphone markets, they'd stay flush selling to those that don't want the cheapest stuff they can lay their hands on.

Maybe Microsoft doesn't care about how cheaply made computer systems are because all MS wants to do is move Windows OS and the more the better. But surely the PC companies should know better than that. They should build solid products at higher costs and leave those $300 pricetags to the China computer companies. Maybe I don't understand everything about computer sales, but I do know that people usually want some sort of quality and good customer service that usually won't come with cut-rate products.

Constable Odo

Fresh-Faced Recruit

Joined: Aug 2007

+2

@Constable Odo

10/20, 04:51pm reply

It's the race to the bottom, for which we have globalization, MBAs and bean counters to thank.

climacs

Fresh-Faced Recruit

Joined: Sep 2001

+1

Wu is a fool

10/20, 06:31pm reply

Wu is consistently wrong with his projections. Stop listening to the guy. AmTech was smart to fire him.

chefpastry

Mac Enthusiast

Joined: Nov 2005

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