The World's Apple's Oyster
04/26/07 - 02:22 PM EDT
Priya Ganapati
"Apple is by far the hottest PC company right now," says Tim Bajarin founder of strategic consulting firm, Creative Strategies. "But they won't be just that. With the Apple TV, iPod and the iPhone, they are changing into a complete communications and entertainment company."
Shares of Apple soared $4.91, or 5.1%, to $100.26 midday Thursday. The stock is up nearly 20% since Jan. 3, and up 47% in a year. In the second quarter, net income at Apple rose 87% to $770 million, or 87 cents a share. Revenue grew to $5.26 billion, above expectations of $5.17 billion. The big surprise was in gross margin, which was up 35.1% from 29.8% second quarter 2006. Though Apple clearly benefited from a fall in pricing of products such as NAND flash and memory, even in the long term, the company said it's targeting gross margin of 27% to 28% -- significantly above that of PC makers Dell(DELL Quote - Cramer on DELL - Stock Picks) and H-P(HPQ Quote - Cramer on HPQ - Stock Picks). "Apple is not just outpacing the industry in terms of PC growth, but it is also not getting into the commodity business" says Bajarin. "Its products are priced much higher, and they still seem to be drawing consumers into stores." The release of Adobe's(ADBE Quote - Cramer on ADBE - Stock Picks) Creative Suite 3 product this week is likely to fuel sales to professional users, while Intel(INTC Quote - Cramer on INTC - Stock Picks)-chip based Mac laptops are likely to increase their market share, says Ezra Gottheil, an analyst with independent research firm Technology Business Research.
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