Getting Ready for Apple's Q2 Earnings

| About: Apple Inc. (AAPL)

Time to get ready: Apple (NASDAQ:AAPL) reports earnings for its fiscal second quarter ended March on April 23 and the Street has started fiddling with its numbers. The consensus is for $6.95 billion in revenue and EPS of $1.06 a share.

Bernstein Research analyst Toni Sacconaghi this morning says the numbers are likely to come in a bit of above the consensus; he sees $6.99 billion and $1.12. He says gross margin should expand to 35%, beating the company guidance of 32%, on favorable NAND and DRAM pricing, some new high-margin products like the MacBook Air and the 32 GB iPod Touch, increased iPhone carrier payments, and no significant price cuts aside from the iPod Shuffle.

Sacconaghi is looking for sales of 2.08 million Macs in the quarter, which he notes is slightly below the consensus of 2.2 million. He sees 1.45 million iPhones sold in the quarter, and 10.2 million iPods. He expects both categories to slow in the June quarter, forecasting fiscal Q3 unit sales of 1.39 iPhones and 9.9 million iPods.

Sacconaghi says he expects Apple to guide below consensus for the June quarter, “per its usual practice.” On the other hand, he expects the company to have a strong calendar second half, driven by the roll out of a 3G iPhone, price cuts and/or the launch of the phone into new countries.

For fiscal 2008, Sacconaghi today slightly reduced estimates: he now sees EPS of $5.25 a share, down from $5.27; for ‘09 he goes to $6.36, from $6.50. He says the revisions reflect lower iPod expectations and a greater fraction of unlocked iPhones, which generate no carrier payments for Apple, offset by slightly higher Mac sales and gross margin.

Sacconaghi says that, despite some near-term caution, “Apple’s current valuation is fair to attractive.” He suggests investors revisit the stock post-earnings.

One final note: AT&T (NYSE:T) reports earnings one day before Apple; you will want to pay attention to anything they say on iPhone unit sales.

Apple today is down $3.98, or 2.58%, to $150.57 just after 1 p.m. EDT.

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