Strong Q3, Q4 In Store for Apple

by , 11:35 AM EDT, April 25th, 2007

Tiger is delayed until October, iPhone doesn't ship until June, stock option grant issues still haunt the company, so what does Apple have to be positive about? Plenty, even though Apple will likely report second quarter earning driven primarily by iPod sales. Apple may offer investors a relatively quiet earnings report Wednesday afternoon, but the rest of the year should hold lots of good news for investors, according to The Street.

Investors probably won't see much added to Apple's bottom line from Apple TV sales yet because the device didn't start shipping until near the end of the quarter. Apple's third quarter, however, will likely be a different story since the home media appliance will have been shipping for a full quarter.

The iPhone will start shipping in June, which will add a partial quarter worth of sales to Apple's bottom line. Although the highly anticipated iPod/smart phone combination will be available for only about half the year, it will likely add a substantial amount to the company's annual earnings.

Apple's second quarter earnings, although not as rosy, should still be healthy. Romeo Dator, co-manager of the U.S. Global Investors All American Equity Fund, commented "I think they will report a slight upside to the consensus revenue and EPS."

Mr. Dator is predicting Apple will beat analyst expectations by reporting 10.7 million iPods sold while reporting in-line Mac sales at 1.45 million. Gross margins could also come in slightly higher than expected at 30 percent instead of Apple's guidance of 29.5 percent.

The general consensus is that Apple will report revenue for the quarter at US$5.17 billion with a $0.64 profit per share. Looking forward, analysts expect Apple's third quarter will end with $5.44 billion in revenue and $0.67 per share profit.

Apple will report its second quarter earnings during an investor conference call Wednesday afternoon. Be sure to check back with TMO for our event coverage.

Apple is currently trading at $94.11, up 0.87 (0.93%).

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