October 22, 2007 4:00 AM PDT
Apple set to report fruits of busy summer
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Another item worthy of attention will be the iTunes Store, which this summer has seen some increased competition--both from other stores like Amazon.com and from the producers of the content themselves. Revenue from the store doesn't contribute nearly as much to Apple's bottom line as the sale of its hardware, but it's still indicative of what people are doing with their iPods and the broader trends for online purchases of digital music and video.
Investors ran up Apple's stock in the week before the announcement, ending the week at $170.42, less than $4 off the company's 52-week high. Apple investors tend to stick with a buy-on-the-rumor, sell-on-the-news strategy, so don't be surprised to see Apple's stock fall next week if the company beats its own targets but misses one of Wall Street's targets for a certain segment.
Last quarter, Apple Chief Financial Officer Peter Oppenheimer warned the financial community not to expect a duplication of the company's second-quarter earnings per share figure of 92 cents a share. To introduce the new iPods, Apple had to clear inventory of older models, which tends to drag down gross margins to some degree.
Oppenheimer also warned of higher component costs and an "expensive" back-to-school promotion, which could have been the iPhone price cut but was more likely the free iPod that student buyers could receive along with the purchase of a new MacBook or MacBook Pro.
Still, Apple is likely to report another very solid quarter to close out its financial year. For the full year, Apple is expected to post revenue of $23.9 billion and earnings per share of $3.78, increases of 24 percent and 67 percent, respectively, and all-time highs.
For any company not named Google, that's an enviable financial picture.
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