Apple Bolsters Notebook Lineup

Investors saw the importance of notebook sales last quarter when Apple reported profit growth that exceeded expectations despite a first-ever drop in iPod sales. This showed that the wide margins on computers can buffer Apple's earnings from volatile swings in consumer buying trends that more acutely affect sales of iPods and related accessories.

"The computer business is really what drove last quarter's results, and sales of laptop notebooks are really gaining traction," said Ryan Jacob, portfolio manager of the Jacob Internet Fund, which has Apple as a primary holding. "MacBooks not only help the top line, but because of their higher margins, they can really boost earnings per share."

The sturdier line of Macs can also help spur sales of other Apple products. They can offer better performance of Apple's iLife software, which has video editing, music sharing and other multimedia features. New service contracts, which are sold on a subscription basis, can bolster the company's recurring revenue.

IDC analyst Richard Shim said the new MacBooks should also be able to handle the features of Apple's Leopard operating system, expected out later this year. Leopard has a better data backup feature and also lets users search the files on other Macs sharing the same network.

The product launch comes just as high school and college graduates begin the search for new tools for their studies and digital lifestyles, an important time to win over new users, said Think Equity analyst Jonathan Hoopes. Incoming college freshman -- and their parents -- are now looking for a computer to take to college with them. Recent college grads may also be shopping for a computer to replace the workhorse they used the last four or five years.

Shares of Apple were recently off $2.53, or 2.3%, to $106.84 amid a modest selloff in tech issues.

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