Apple is Ratcheting Higher: Is it Stock Split Time?

Today's another big day for Apple (AAPL) "Computers" (it’s going to take me a while to stop using the old name) as the company reports results for the fiscal first quarter ended December 31.

Shaw Wu, an analyst with American Technology Research, expects the company to report results in-line to slightly above the consensus of $6.4 billion in revenue and profits of 78 cents a share. Apple had previously glided from $6 billion to $6.2 billion and 70-73 cents, but the Street seems convinced that those numbers are out of date.

Wu expects the company to report shipments of 1.8 million Macs in the quarter and 15.5 million iPods.

One interesting factor is that expectations for Apple keep ratcheting higher: according to Thomson Financial data on Yahoo Finance, the average estimate for Apple for the September 2007 fiscal year now stands at $2.80 a share, up from $2.65 just 90 days earlier; over the same time span, expectations for fiscal 2008 have jumped to $3.51 a share from $3.12. Call it the iPhone effect.

Clearly, the market seems more focused on earnings and the potential for the iPhone than it is on the company’s stock option backdating problems. Apple shares are up.

By the way, with the stock getting so close to triple digits, you have to wonder whether there might be a stock split coming. The last time Apple’s shares started pushing close to $100, in early 2005, the company split the stock two-for-one.

AAPL 2-yr chart

Comments

[Julian Ivan...:]

I hope they don't stock split. What for? What's the point? The company doesn't need to pull stunts like that to attract attention or investor interest. It just needs to get on with churning out great products and producing record earnings quarter after quarter - something it has been doing for about the last 6 years consistently.

2007 Jan 17 06:46 AM

[David Lentz:]

I think that the "cure" for the stock split "disease" is to allow trading in fractional shares. The only real justification for stock splits is that a high stock price makes it difficult to invest small amounts.

How many people could put (non-Roth) IRA money into Berkshire Hathaway? With a $2K limit on annual contributions, none. How many individuals shy away from investing in GOOG merely because of the share price?

While AAPL is a long way away from turniong away would-be stockholders due to a high price, it's a part of human nature to see riding a stock from 20 to 100 as being somehow different/better than riding it from 100 to 500. Part of the job of the management of a company is to make the stock attractive to buyers. Apparently pricing is as important as the book value in that regard.

2007 Jan 17 10:09 AM

[Tom B:]

I agreed. I'd like a split. I prefer stock prices to be below $50, as a small-time iinvestor.

2007 Jan 17 02:19 PM