Analyst: Apple Likely to Post Postive Quarter

American Technology Research analyst Shaw Wu expects Apple Inc. will report earnings lightly above industry consensus during its first quarter financial report on Wednesday. He commented "Based on our analysis, we believe Apple is on track to report results above the upper-end of its guidance of $6.0-6.2 billion in revenue and $0.70-0.73 in EPS."

But itis not just iPods driving Appleis revenue up. Macs are contributing a fair share to the companyis bottom line, and Mr. Wu is projecting an 11 percent increase in sales compared to last quarter, and a 38 percent increase in Mac revenue based on 1.8 million units sold.

iPod sales are expected be up substantially for the holiday quarter. "On the iPod side of the business, we see a continued rebound (up 77% Q/Q) to 15.5 million units due to strength in iPod shuffle and special edition red-colored nanos," he said.

For the March quarter, Mr. Wu predicts that iPod sales will drop substantially to 9.3 million units. The decline will be offset, however, by the AppleTV - set to ship in February. On the AppleTV, Mr. Wu said "We believe AppleTV could be a surprise hit with its attractive $299 price point. We see the product as a logical extension of its dominant iPod + iTunes franchise."

Mr. Wu also notes that for the first time in over a year, consensus out-quarter revenue estimates finally seem reasonable. Apple is likely to guide conservatively projecting between US$5.1 and $5.3 billion in revenue, and he his modeling based on $5.2 billion in revenue and $0.63 EPS.

Looking forward, Mr. Wu is maintaining his "Buy" rating and target price for Apple stock at $99 based on calendar year 2007 projections. Moving into 2008, he expects Apple to maintain its momentum based on its four major product categories: iPod+iTunes, Mac, AppleTV, and the iPhone.

Apple stock is currently trading at $96.45, up 1.83 (1.94%).

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