Analyst ups Apple estimates – anticipates a low-end MacBook, the iPhone on Verizon, and a stock buyback, but is skeptical of a tablet

Mon, Aug 24, 2009

Finance, News, Rumors

Doug Reid, of the research firm Thomas Weisel, recently upped his 2009 EPS estimate for Apple to $5.38 and his 2010 EPS estimate to $6.51.  His previous estimates for 2009 and 2010 came in at $5.38 and $6.51 respectively.  In light of his new earnings predictions, Weisel also set a price target for Apple stock at $180.

Factoring into Reid’s estimates are higher than expected margins and the trickle effect on earnings caused by Apple’s accounting method for the iPhone whereby it spreads out the purchase price for each iPhone sold over a period of 24 months.

Following a meeting with Apple, Weisel observed that Apple executives have a “clear preference” for abandoning their current iPhone/carrier model which provides AT&T, and other carriers abroad, with the exclusive rights to sell the iPhone.

On that note, Reid noted that Apple is “making every effort possible to road map toward an agreement with Verizon in the US.”  Apple, though, has flat out stated that it has no interest in developing a CDMA version of the iPhone, so the iPhone on Verizon will probably have to wait until 2010 when Verizon is scheduled to roll out its 4G network.

Also of interest are Reid’s comments that Apple executives believe that the current low-end MacBooks appear “tired”, prompting Reid to speculate that Apple will release a low-end MacBook in the $700-$800 range.  This is the second time we’ve heard about a low-end MacBook, which makes us wonder about how Apple would position a tablet, both in terms of price and features.

Interestingly enough, Reid writes that Apple tablet rumors have gotten somewhat out of control, and that Apple is “less likely to pursue a tablet than many investors expect.”

And finally, Reid writes that Apple may embark on a stock repurchasing program sometime in the next year.  There’s no doubt that Apple has the cash to do it, and the move should keep investors happy as it would artificially inflate the company’s earnings per share.


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2 Comments For This Post

  1. Dave Says:

    “would artificially inflate the company’s earnings per share.”
    WHY DO YOU SAY”ARTIFICIALLY”? Less shares mean higher per share earnings with the same $ of earnings. The earnings per existing share are REAL.

  2. Edible Apple Says:

    Artificial in the sense that Apple’s PE ratio would increase, even though revenue figures wouldn’t be affected. In hindsight, though, “artificial” may not have been the most descriptive word to use.

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