Apple Likely to Show Strong Q4 Earnings

American Technology Research analyst Shaw Wu expects Apple will report fourth quarter revenue in line with or above its US$4.5 to $4.6 billion guidance. Apple will report its earnings on October 18 after the market closes.

Mr. Wu predicts that Apple will report revenue at $4.6 billion with $0.49 EPS. A rebounding iPod market fueled by new models, along with strong Mac sales have positioned Apple for a positive report, and for a strong December quarter, too.

Apple is still dealing with its options grant investigation, and the still undisclosed non-cash charges need to be signed off by its external auditor. As such, may offer only limited financials. Mr. Wu commented "Given the recent timing, we believe there is a fair likelihood that Apple will disclose limited financials. Should Apple give out full financials, we believe this would be viewed a positive."

Looking forward, Mr. Wu feels Apple is still in a strong growth position. "We anticipate continued strength in its Mac business (up 6 percent Q/Q) driven by MacBook and a rebound in its iPod business (up 5 percent Q/Q) helped by new nanos and initial shipments of its new shuffle."

Growth in 2007 is expected to come from the announced iTV home theater product (due in March), movie contracts with additional studios, a new widescreen video capable iPod, the Core 2 Duo upgrade cycle for Macs, and an Apple-branded cell phone.

Mr. Wu is also anticipating a soft pull back on Apple shares in the December quarter due in part to the stock options investigation. The companyis current product offerings, as well as upcoming products will keep Apple positioned as one of the best positioned technology companies.

Mr. Wu is maintaining his "Buy" rating and $91 target price for Apple. Apple stock is currently trading at $74.18, down 0.04 (0.05%).

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