Analysts up Apple recommendations on big profit increase news

Apple Computer this morning was upped to ‘outperform’ at Bear Stearns and upped to ‘buy’ at First Albany.

Apple Computer yesterday reported its fiscal third-quarter earnings more than tripled and sales rose 30 percent. Apple said earnings rose to $61 million, or 16 cents a share, from $19 million, or 5 cents a share, a year earlier. Excluding charges, net income was $67 million, or 17 cents a share.

Apple Computer, Inc. (AAPL) quote here.


  1. Don’t buy into the madness, Apple will die by Christmas as Dell DJ sales take off and people come to their senses and start using WMA as their format of choice.

    Think of your children.

  2. There are some hidden negative flags in an otherwise rosey picture. Net margin is hovering below 4% – NOT GOOD. In order to get the iMacs into consumer’s hands Apple will once again have to air freight the product, lowering margins – NOT GOOD. iPods while selling extremely well are not high margin items – NOT GOOD. mini iPods are not really going to be in sufficent supply for the foreseable future – NOT GOOD. Apple is not undervalued. It is actually overvalued to some extent, particularly with everybody getting on the band wagon at the moment.

    When all is said and done, the company is doing reasonably well but market share for computers is still way to low. 3 years ago Apple execs. boldy predicted that they would have about 5% market share by now. Didn’t happen.

  3. pkradd:

    I’ve heard this canard about the iPod being a low-margin item before, and it is false. A couple of quarters ago, it was reported that gross margins on iPod were around 20-22%. Gross margins are probably at the high-end of that now, with the intro of the ‘grossly overpriced’ (sic) iPod mini, but will also drop back – probably to around 17% – when HP start selling the OEM HPpod.

    And the airfreight situation for the real products of Apple (computers) is actually a factor that comes out of gross margin which is hovering around 21% with the airfreight factored in, and would be several points higher when the problem goes away (i.e. after the pump is primed).

  4. MCCFR’s figures are right, I believe. 17%-21% are pretty darn good margins in the industry. The reason Apple’s net margin is not very high is because Apple has to pump a lot of $$ into R&D, relative to its size. But with total profit tripling, and expected to increase further, that works out just fine from a business standpoint. (It works out even BETTER for consumers!)

  5. “Dell DJ sales take off and people come to their senses and start using WMA as their format of choice.”

    Apparently this was to be an iPod killer…Relax..No such thing. If it didn’t take off when it did it still won’t. peace.

  6. I agree that Apple is probably a bit overvalued at this point, as all tech stocks seem to be (again). The largest problem the company seems to be encountering right now is with their suppliers, though. But with a 3rd quarter like this one, it could be worse.

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