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TheStreet Open House

Apple May Need to Power Up Mac

Those targets imply that analysts are expecting Apple's earnings per share to more than triple this year on a jump in sales of more than 60%.

Full Harvest

Despite the heady expectations, Apple's recent history gives many analysts and investors confidence it will be able to hit or exceed those targets. In its first quarter, the company's sales jumped 74% to $3.49 billion, more than quadrupling net earnings.

Driven by the improving results and analysts' expectations of more to come, Apple shares have soared. The stock has more than tripled in the last year and is up 32% this year.

The stock's appreciation has pushed valuation up to 38 times expected earnings this year and 32 times expected earnings for the next fiscal year.

In contrast, PC industry leader Dell (DELL) is trading at less than 24 times expected earnings this year and 20 times expected earnings for fiscal 2006.

Of course, Dell doesn't have the iPod.

Apple's iPod sales nearly quadrupled last year to $1.3 billion from $345 million in the prior year. Last quarter, sales of the device nearly quintupled, rising to $1.2 billion from $256 million in the first quarter of fiscal 2004.

Many analysts expect those numbers to continue to grow, at least in the short term. According to market researchers, Apple continues to dominate the market for hard drive-based digital music players. In February, the company's iPods held 89.3% of the market for hard-drive players in terms of units sold at retail stores in the U.S., according to NPD Group.

Prior to this year, Apple offered only hard drive-based players, sales of which constitute around 50% to 60% of the total digital music player market. But in January, the company introduced the iPod Shuffle, its first flash-based digital music player. Early indications are that the Shuffle has been a success also, according to market researchers. Apple captured 45% of the U.S. retail market for flash-based players in February, based on data from NPD Group.

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