TMO Reports - Analyst: Apple Set to Record Second-Best Quarter in its History

by , 1:40 PM EDT, April 11th, 2006

Analyst Shaw Wu of American Technology Research on Tuesday predicted that next Wednesday, Apple will report financial results that make the first quarter of 2006 the second best in its history. He expected that the company will exceed its guidance of US$4.3 billion in revenue and $0.38 EPS.

"Specifically," Mr. Wu wrote, "we are modeling $4.4 billion, $0.43, and 8.8 million iPods vs. consensus of $4.6 billion and $0.44. For the June quarter, we continue to believe AAPL will guide conservatively, reflecting efforts to reduce inventory of PowerPC Macs and older iPod Nanos. We are modeling $4.4 billion, $0.44, and 8.5 million iPods vs. consensus of $4.7 billion and $0.48. We believe consensus revenue estimates remain unrealistically high and believe AAPL will likely make another attempt to reset expectations."

He added: "We believe AAPL is well-positioned to deliver upside with strong 2H seasonality and strong product momentum, including a new low-cost Intel portable and changes in its iPod line-up. We are modeling [Apple] to grow 35% over the next 12 months. We remain firm believers that the move to digital entertainment is a multi-year trend and that AAPL is well-positioned to capitalize with its unique and defendable iPod + iTunes and Mac franchises."

The analyst retained his "Buy" rating on the stock, which was selling for $68.58 at 1:37 PM EST on Tuesday, down 0.13% for the day amid broader Nasdaq weakness. Apple's shares jumped dramatically last week on the heels of the release of Boot Camp and then dipped slightly as investors took profits. Trading was light on Monday and through most of the day Tuesday.

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