“There should be more good numbers [for Apple Inc.] Tuesday, with analysts expecting Apple will report a profit jump of 36.8%. Apple will report net income of $645.6 million for the quarter ending in June, or 72 cents per share, up from $472.0 million, or 54 cents per share, for the year-ago period, according to the consensus analyst estimate published by Thomson Financial. Sales should be strong too: Analysts expect Apple will report sales of $5.3 billion, up from $4.4 billion during the year-ago period,” Brian Caulfield reports for Forbes.
“But those strong numbers won’t necessarily translate into good news for Apple shareholders. That’s because confidence in Jobs is so high that some expected him to do the impossible: help AT&T sign up as many as 500,000 iPhone subscribers in less than two days,” Caulfield reports. That’s “the tricky thing about Apple. Expectations are so high that even hard-boiled Wall Street types are now ascribing magical powers to Steve Jobs. Yet the ability to stir up that kind of excitement, among consumers, at least, is the propellant in Apple’s rocket.”
“As a result, here’s how to tell when the Apple craze is about to end: Watch how much profit it can wring out of every dollar of sales. Analysts expect Apple will report gross margins of 32.74% Tuesday, up from 30.32% during the year-ago period” Caulfield reports. “As long as Apple’s margins are high, the demand for Apple products is real, and Jobs should continue his run. But once Apple’s ability to command top dollar starts to slip, get set for the end of the magic act.”
Full article here.
Don’t hold your breath for Apple’s margins to slip.
What I really relish about is the fact that in spite of all the bad damming articles you read about Apple, it is at it’s strongest position today. All the criticism the Mac has gotten through year after year of unfounded attacks. Yet it is still a lot better proposition then the alternative. Now we have the iPod and the iPhone and possibly the Apple TV, that if things converge in Apple’s favor, it could be a smashing success dwarfing even the iPod success story.
@ChrissyOne
The most famous MDN poster spoke to me!!!!
Ok, over the shock now.
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Here’s what I took issue with in the report – and in most of them so far – “signed up only 146,000 iPhone subscribers”
I suppose that can be taken a number of ways depending on the POV you’re taking. Could be misleading saying that only 146k phones were sold/activated. Could be only those 146k people were able to sign up those two days. Now, I happen to believe the second, but I think that people are substituting ‘subscribers’ with ‘total iPhone sales.’ Does that make sense?
I think people are blowing everything out of proportion, Apple sold a shitload of phones and we’ll see how many today. Maybe.
Oh give me a break everybody – You mean if Apple doesn’t make me rich immediately following Q3 results reporting that Apple’s on its way down if not out, again? Can we get it through our collective heads that Apple is an excellent long term investment? ‘Cause most of the analysts can’t. Even the apparently positive language of many market analysts over the last two years has been cloaked in near-term profit taking lingo, rather than analyzing Apple as a very real worth-while and serious personal investment.
MW: “enough” – As in enough already. Apple is a great ETF to include in any type of serious investment portfolio, and will be for a very long time to come.
RDF.
You got the point.
****Correction
I believe maybe only 146k were activated during that time, but that far more phones were actually sold. Sorry.
Apple magic will fade when Steve retires…
Good letter Shawn (except for one minor spelling mistake).
I think SJ did a relatively poor job of creating a vision for Apple in his previous life, but this time around I think he brought a lot of common sense business savvy, combined that with attainable but cutting edge goals, and ultimately created a vision that almost everybody gets – clearly. And I believe that SJ must be grooming someone he’s hand picked for the job. No – I patently disagree that Apple will “fade” when SJ leaves. Apple is here to stay, and no amount wishing is going to make it go away. In ten more years Apple’s per share value may level off, much like MS, but that still makes it a valuable asset for any portfolio.
“There should be more good numbers [for Apple Inc.] Tuesday.”
No need to read any further.
Shawn, “Besides, there was only 30 hours left in the quarter when the phone was on sale, how, by any stretch of the imagination is this a failure or cause such a dip in investor confidence?”
there ‘were’ only 30 hours left’ after ’cause’ SB- ‘for’
Since you asked for comments.
If you want more profit margins from Apple, all they need to do is to sell more of their own software.
Where are the new versions of Apple software?
thank you ron, i noticed that too…dammit. the internet needs spell check! oh well, he got the point! I’ll post the reply – assuming i get one!
Q. How to tell when Apple’s magic is fading?
A. When Dell freezes over.
> When Dell freezes over.
Dell is practically “frozen” right now. That would NOT be a good indicator of Apple’s magic fading…
Just where, exactly, are all these “expectations” coming from and that everyone is reporting as being disappointing?
Is there a Federal Agency of Expectations somewhere on Wall Street?
And do any of these “analysts” ever bother to question whether or not these “expectations” they report on just might be a tad high, if not outright unrealistic?
BTW, If anyone thinks these “expectations” about Apple are ridiculous, you should check out the nonsense “expectations” reported about every new Pixar film.
These people are out of their freakin’ minds.
@ nobodi
Read this for some insight into where these expectations come from:
http://www.roughlydrafted.com/RD/RDM.Tech.Q3.07/27135BAE-C9DC-4ECD-B0B1-135D1D607908.html
Hi,
I just may just be envious of his money, but doesnt it feel like you’d like tell Stephen that hes a greedy CEO! I mean with the lackluster features in the next OSX, no iWork, iLife, or Skype like service offerings?
Ciao,
Paul
@Paul
Repeat after me.
Paul is a idiotic troll! Paul is a idiotic troll! Paul is a idiotic troll! Paul is a idiotic troll! Paul is a idiotic troll! Paul is a idiotic troll!
Go back to your basement boy wonder!
It’s shocking how many people there are who are too dumb to realize how pathetic they look predicting the downfall of a kick-ass company like Apple that’s just beginning its best years. The more successful Apple becomes, the more morons will join the chorus of critics.
Here’s the recipe for their famous Oooga Booga Cocktail.
Combine one part each:
Jealousy
Defensiveness
Short-sightedness
Old-fashioned mean-spiritedness
Add a generous dollop of Dumb Ass and serve.
Why can’t ’s Shares = Google Shares ($500.00 +). Apple has so much room vertically to grow and has great products, while Google makes advertising dollars (don’t get me wrong I like Google).
I just don’t understand the problem with Apple reaching $500.00 + a share.
A great article for the digital bird cage.