APPLE Should Beats Earning but Other Number Counts

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Jul 24 2007
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Top U.S. telecommunications service provider AT&T Inc. (NYSE: T, stock) said on Tuesday quarterly profit and revenue rose, helped by growth in wireless and Internet subscribers. AT&T, which began selling Apple’s iPhone on June 29, however said it activated 146,000 iPhone subscribers in the first two days of the launch with more than 40 percent of those subscribers were new customers.

The data immediately sent stock price of Apple Inc.’s (Nasdaq: AAPL, stock) plunge 4 percent (off $5.70 to $138.02) this morning’s trading before recovered to minus $4.00 or down by 2.85 percent (as of 10:30am Tuesday). The 146,000 iPhone sales were well below analyst estimates.

Apple Inc. is set to announce its’ earning tomorrow, Wednesday 25th July, 2007 after market closed. So would Steve be able to announce another round of earning which will beat the estimate $0.72 per share? It has to if Apple wishes to see today’s disappointed figure of iPhone sales and the share’s drop be compensated and set a dynamic and uptrend or possibly gap-up.

If the investors smell any earning figures which do not looks impressive enough, it could be punished a second time. And the second time of punishment would not be a nice view to look at, that’s for sure. Nevertheless going by the normal conservative figure given by Steve as usual, Apple is on the high probable of beating the estimate. It’s a question of whether the set of numbers are impressive enough for analysts to say the current stock price is trading at the lower range (and substantially raise their targets).

Trading at P/E (price to earning ratio) of 45.50, Apple’s stock price is not cheap. It’s even higher than Google Inc. which is trading at 43.60 multiple of its earning. Not an easy decision to make if you should long or short the stock, don’t you think? Well, depending on how long is your investment for Apple, you might want to long it if you’re optimistic the iPhone numbers will eventually go above analysts’ estimate.

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