Thursday, October 15, 2009

Apple Inc. (NASDAQ: AAPL): Fourth Quarter Earnings Preview 2009

Apple Inc. (NASDAQ: AAPL) is scheduled to report fiscal fourth-quarter results before the market open on Wednesday, October 21, 2009. Analysts, on average, currently expect the company to report earnings of $1.40 a share on revenue of $9.13 billion. In the year ago quarter, the company reported earnings of $1.14 billion or $1.26 per share on revenue of $7.9 billion.

Apple Inc. and its wholly owned subsidiaries design, manufacture, and market personal computers, portable digital music players, and mobile communication devices, and sell various related software, services, peripherals, and networking solutions.

The demand for Apple’s innovative products has remained strong despite severe economic downturn. Late in April, then company reported that its third quarter profit rose 15% to $1.23 billion or $1.35 per share, compared to $1.07 billion or $1.19 per share for the prior year quarter. Revenue jumped 12% to to $8.34 billion from $7.46 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.17 per share on revenue of $8.20 billion. Gross margin for the third quarter improved to 36.3% from 34.8% a year ago, while operating margin increased to 20.0% from 18.6% a year earlier. Apple sold 2.6 million Macintosh computers during the quarter, up 4% from the year-ago quarter. Sales of the company's iPod music players fell 7% to 11.01 million units in the third quarter, while IPhone sales jumped 626% to 5.2 million units.

The company expects to report fourth quarter revenue in the range of $8.7 billion to $8.9 billion and earnings per share in the range of $1.18 to $1.23.

Technology research firm Gartner estimates that Apple shipped 1.572 million Macs in the United States inn third quarter for an 8.8% market share, up 6.8% year to year. IDC's projections are slightly higher: 1.64 million Macs, 9.4% market share, up 11.8% from year earlier quarter.

The iPhone maker has registered strong international growth in recent times. The company is eyeing many key overseas markets to drive future growth. Recently, China Unicom Hong Kong Ltd. announced that it has reached a three year agreement with Apple Inc. to sell Apple's iPhone in China, the fastest growing economy. The initial launch is expected to be in the fourth calendar quarter of 2009. Vodafone Group plc too confirmed that they have reached agreement to sell iPhone 3G and iPhone 3GS to the UK and Ireland in early 2010. On September 28, Orange reached an agreement to sell Apple's iPhone in the UK, bringing to an end a two-year exclusive arrangement between UK network operator O2 and the Californian phone maker, which has been in place since 2007. Meanwhile, Bell said that it reached an agreement with Apple Inc. to bring iPhone 3G and iPhone 3GS to Canada this November.

Early in September, Apple Inc. introduced the new iPod nano, adding a video camera, mic and speaker. The company also launched the new iPod touch lineup starting at $199, down from its previous price of $299. iPod nano also features a built-in FM radio with live pause and iTunes Tagging, as well as a built-in pedometer. Apple also brought down the starting price of its iPod shuffle to $59, which is available in five colors. Further, the company introduced the new iPod touch lineup starting at the breakthrough price of just $199. Late in August, Apple officially launched Snow Leopard 10.6, the latest upgrade to Apple's OS X operating system.

In terms of stock performance, Apple shares are up 111% since the beginning of the year.

Disclosure: Author doesn’t own any of the stocks discussed here.

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