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Wednesday, April 23, 2008

Apple (AAPL) 2Q:2008 preview

Ok. In brief:

AAPL -- street is expecting good margins for the quarter on the back of strong Mac sales and increased gross margins on meager iPod sales. Numbers have been creeping higher for the last week or so.

iPods -- 9.5 - 10.5 million. If it's the low end, it will be a negative surprise. Apple bulls think people concerned about iPod #s are silly and missing the larger picture. Hard to see much improvement here near-term.

Macs -- market share gains (IDC showed Mac had picked up a percentage point of share -- thats a big # when you consider Mac originally had 5% and now it's 6% -- a 20% increase) and the too cool for school Macbook Air should total Mac unit sales in the 2.1-2.2 mil range. Anything less would be a disappointment.

iPhones -- kind of the blind spot in the story here near-term. Lots of speculation on when the 3G iPhone will ship. Street may be disappointed if it doesn't ship in June. Expect to see them reiterate their 10 mil unit forecast.

Citi's Rich Gardner was out with a pretty substantial gross margin forecast increase this week, raising his estimate to 36.5%. The street is still under 34%. He also raised his revenue forecast to 7 billion. He says the company will guide revenues, gross margins and profits lower on a sequential basis -- the street is forecasting higher revenues of 7.2 bil for next quarter and this could obviously create some after-market controversy. The bulls will tell you that Apple has become notorious for low-balling the street on guidance.

I'm not involved in Apple at present.

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