Analyst: Even a Small Market Share Increase Will Impact Apple EPS

Piper Jaffray analyst Gene Munster on Thursday issued a research report in which he looked at the "material impact" even a small increase in the Macis market share could have on Appleis EPS (earnings per share).

He wrote: "We believe Mac market share is poised for growth for the following reasons: 1) Intel transition nearly complete, 2) improved availability of Macs, 3) expanding footprint of users of Apple products -- expect 85m iPods shipped by end of CY06, and 4) ability to run Windows on Mac."

Appleis worldwide market share has hovered in the 2.1-2.5% range. Mr. Munsteris current model calls for that to remain at 2.3% and 2.4% during CY06 (calendar year 2006) and CY07, respectively. However, if those numbers hit 3.0% and 3.5%, Apple would see a 10% and 16.5% increase in EPS, respectively. Increase those percentages to 3.5% and 4.5% and they jump 17.5% and 31%.

The analyst also assumed that the ASP (average selling price) for Macs would be US$1,325.60 in CY06 and $1,269.80 in CY07, presumably dropping as switchers opt for lower-priced models as they test the Mac OS X waters.

Mr. Munster retained his "Outperform" rating on Appleis stock, with a $99 price target. At 1:54 PM EST on Thursday, the companyis shares were selling for $58.85, up 1.71% for the day and defying a broader Nasdaq downturn.

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