Apple May Need to Power Up Mac
Apple's (AAPL) iPod may be grabbing all the attention these days, but its Macintosh computers are still the key to the company's continued success, some analysts say.
Sales of iPod digital music players have revived Apple's business over the last two years. But the lion's share of the company's revenue and profit still comes from computer sales.
For the company to maintain momentum -- and its sky-high stock price -- the Mac computer line needs to catch some of the iPod's fire, analysts say.
"What happens down the line, that's the worry with Apple," says Jay Somaney, a portfolio manager with TSG Capital Group, who is net neutral on the stock, being long the shares and put options. Computer sales "could be the wild card, and that's what I'm watching for," he says.Somaney and other Apple watchers should get some insights into the company's business Wednesday afternoon, when it reports second-quarter earnings. Many on the Street have high expectations for the company's just-completed second quarter. Analysts polled by Thomson First Call are expecting a profit of 24 cents a share on $3.18 billion in sales. That's far ahead of Apple's own outlook; in January, Apple predicted it would earn 20 cents a share in its just-completed quarter, on $2.9 billion in sales. Assuming the company hits even the lower target, it would mark a considerable improvement from the year-ago period, when Apple earned $46 million, or about 6 cents a share, on $1.9 billion in sales. Apple has yet to provide an outlook for the rest of its fiscal year, but the Street is expecting the company to keep on clicking. In the third quarter, analysts are predicting a profit of 24 cents a share on $3.21 billion in sales. For the full year, they are looking for $1.11 in per-share earnings on sales of $13.34 billion.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV