Apple’s Second Quarter Expected To Show High Profits
04.25.07 - 10:44am
Apple is expected to show high fiscal second quarter profits where usually they would see a downtrend in profits due to the
post holiday sales slump.
Analyst estimate Apple’s net income rose 43 percent to $586.3 million due to a price cut in the memory chips and display screens Apple uses. This reduction in component cost allowed for Apple’s profit to out pace its sales growth. The price of the flash-memory chips were reduced almost in half falling as much as 45 percent.
“Since component prices have come down more than anticipated, there could be a real nice pickup on the bottom line,” said Chuck Jones, a San Francisco-based analyst for Atlantic Trust which manages $17 billion including Apple shares.
As far as actual sales are concerned analyst Gene Munster from Piper Jaffray, after speaking with 20 Apple resellers and finding that 85% are expecting only a 5 to 10 percent decline in Mac sales, is forecasting that while Mac sales will be down from last year in the same quarter he does expect them to be higher than most analysts are expecting. Munster said “The Street is expecting Mac units to fall 10 percent q/q, so we may see slight upside to Street expectations of 1.45 million Macs.”
The iPod is expected to show a rise in sales according to Munster who said, “Subtracting total iPod units reported through Dec-06 (about 89 million units) from the 100 million units, and accounting for the 9 days in April, implies Q2 iPod units of about 11 million.” Analysts only predicted Apple would sell 10.7 million units for the second quarter.
At the end of March Apple’s stock was up almost 10 percent for the quarter closing at $92.91. Today it is rising due to the promising reports, and is currently up $1.03 from yesterday to $94.27 and rising.
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