“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.