Apple Inc.'s third-quarter results should exceed expectations, helped by strong Mac sales and deferred revenue from the earlier version of iPhone, analysts said Monday.
Shares of the computer maker, which will report results after the closing bell, fell 2% to $161.60 in mid-day trading. The shares were hurt by disappointing second-quarter results from Google Inc. (nasdaq: GOOG - news - people ) and Microsoft Corp. (nasdaq: MSFT - news - people ) last week.
Analysts polled by Thomson Reuters, on average, expect Apple (nasdaq: AAPL - news - people ) to report a June-quarter profit of $1.08 a share on sales of $7.37 billion. Estimates were raised seven times over the last four weeks.
Apple has beaten Wall Street's expectations in all of the last four quarters.
JPMorgan's Mark Moskowitz backed a neutral rating on Apple's shares, citing 'lingering macro clouds.' He expects Apple to beat its $1.00 a share earnings and $7.2 billion sales guidance.
Noting that Apple typically issues a conservative outlook, the analyst said upside is expected.
Moskowitz raised his third-quarter estimates to $1.08 a share on sales of $7.39 billion, above the mean view. He also lifted his 2008 estimates to $5.19 earnings on sales of $32.69 billion. Wall Street's mean view calls for earnings of $5.21 a share on revenue of $32.77 billion.
'Mac momentum and conversion of deferred revenue related to the iPhone are key drivers in June,' Moskowitz wrote. 'Looking ahead, we are increasingly constructive on the Mac and the 3G iPhone.'
RBC Capital Markets analyst Mike Abramsky expects Apple to do it again, with $1.13 earnings on sales of $7.5 billion, thanks to back-to-school promotions and strong Mac computer sales. He backed an outperform rating and $220 price target on the stock.
Citing RBC's proprietary IQ/Changewave survey data, Abramsky sees 2.4 million Mac units sold during the third quarter, up 37% from the year-earlier period and up 5% from the second-quarter. He pegs Mac revenue for the June quarter at $3.6 billion, up 43% from 2007.
'Second-quarter Mac momentum is expected to benefit from back-to-school promotions, stimulus cheques, continued BestBuy rollout and tight inventory,' the analyst wrote to clients earlier.
Abramsky expects Apple to issue its typical below-Street guidance for the upcoming quarter, with its fourth-quarter views bracketing the mean $1.24 earnings and $8.3 billion sales estimates.
'While we expect ongoing strong iPhones/Mac momentum, Apple may face near-term valuation risk as revenue guidance next 1-2 quarters may be impacted
by higher iPhone mix (lower upfront revenue) and iPod attrition, pending iPod Nano refresh in fall.'
During Apple's conference call, Abramsky will be listening for the company's plans to expand its international sales and increase market share, where it is seeing demand for Mac and how market share gain drivers have changed for the Mac. (full story Link)
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