Commodity Issues Not Likely to Impact Apple

Piper Jaffrayis Gene Munster on Tuesday issued his second research report about Apple in as many weeks. This time, he addresses recent concerns about commodity pricing expressed by Dell and Gateway. Both companies recently lowered their guidance partly because of expected high commodity prices this fall, but Mr. Muster does not expect that issue to impact Apple.

He writes: "There are two reasons why we believe Apple is not being impacted: 1) component pricing factored into guidance, and 2) Apple has essentially maintained ASPs [average selling prices]." He goes on to quote Tim Cook, Appleis Executive Vice-President of Worldwide Sales, as saying during the companyis July 13 quarterly results conference call: "Going into Q4, primarily due to the typical industry-wide seasonal demand that occurs in this period of time for back-to-school, we see DRAM increasing from the lows that we experienced last quarter.

"We also see certain sizes of flat-panel displays rising. And finally, we see that declines in hard drives are likely to be lower than historical norms due to component shortages in that industry. Other commodities we believe will likely follow this trend."

Noting that Apple has kept its ASPs the same since January, Mr. Munster writes: "Unless there has been a significant shift to lower end Macs, which we have not seen any evidence of, we believe Apple will not be materially impacted by the ASP issues seen by Dell and Gateway."

He maintains his "Outperform" rating and US$52 52-week price target on Appleis stock, which ended the day Tuesday at $46.25, down 3%. However, both the Nasdaq and the Dow were down on concerns that higher gas prices, as well as a jump in inflation, could curb consumer spending.