The Mac Observer

Skip navigational links

You're viewing an article in TMO's historic archive vault. Here, we've preserved the comments and how the site looked along with the article. Use this link to view the article on our current site:
Analyst: Apple Guidance Low Balls Expectations

Analyst: Apple Guidance Low Balls Expectations

by , 11:15 AM EDT, July 22nd, 2008

Apple's high third quarter earnings were balanced by conservative guidance for fiscal 2009, catching analysts off guard. The company said it is expecting next year's gross margin to come in at 30 percent instead of the 33 to 34 percent analysts where expecting, according to American Technology Research's Shaw Wu.

Despite the unexpected guidance, Mr. Wu thinks Apple may have made the right choice. "While we believe Apple may likely be overly conservative," he said, "we believe directionally it could be correct in that the easy gains from favorable components will likely prove more difficult given rising raw materials costs including plastics, copper, gold, aluminum, etc."

Thanks to the higher margins the iPhone offers, and with production ramping up, some analysts were expecting Apple to guide more favorably. Apple, however, claimed that a yet to be announced "product transition" would have an impact of revenue.

That may be, but Mr. Wu thinks that there is more to the conservative guidance. "We suspect general commodities inflation is also a consideration in the cautious tone," he said.

Looking forward, Mr. Wu has adjusted his iPhone gross margin model to 32.8 percent from his previous 34 percent. He is projecting US$32.9 billion in revenue and $5.34 EPS, up from his earlier $5.33 EPS. For fiscal 2009, he is expecting $39.2 billion in earnings and a $6.35 EPS, up from $38.6 billion.

Mr. Wu is maintaining his "Buy" status and $220 target price for Apple's stock. Apple is currently trading at $152.80, down 13.94 (-8.11%).


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

Recent Headlines - Updated July 28th

Fri,9:03 PM
3 Free iOS Apps To Help You Find Something To Watch
8:57 PM
9 Swift Resources for iOS 8 Developers
7:39 PM
OS X and iOS Application Compatibility Table
6:35 PM
Best News in the Verse: Firefly Cast Reuniting for Firefly Online
6:26 PM
Bose Sues Apple Acquisition Beats for Patent Infringement
5:11 PM
iZZi Slim 4-Lenses-In-One Photo Kit: $95
3:44 PM
Take Control of Yosemite Beta Testing Released
1:42 PM
Judge Cote Calls Apple Ebook Settlement Unfair to Consumers
1:15 PM
TMO Daily Observations: 2014-07-25
10:24 AM
comiXology Intros DRM-free Digital Comic Backups
8:45 AM
OS X: Repair Home Folder Permissions
Thu,8:48 PM
Hedge Fund: ‘Apple Might Become Obsolete in 2-3 Years’
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!