Prudential previews Apple's (NASDAQ:AAPL) September Q earnings. Firm expects Apple to post upside to street estimates for the SepQ, driven by Mac strength and favorable component cost declines. They are modeling revenue of $4.8B and EPS of $0.55, ahead of consensus estimates of $4.7B and $0.51.
Firm is more cautious on the outlook for the DecQ and think that iPod sales and overall margin could fall short of investor expectations. They see upside to iPods as limited given the absence of new product offerings and increasing competition from MSFT's mid-Nov launch of Zune. Firm sees recent price cuts to Apple's iMac and video iPods, combined with recent rises in component costs placing pressure on Apple's margin.
Firm expects Apple to introduce two cell phone models in the MarQ, including one smart phone with integrated video and music capability, and a slimmer phone with music capability. Their checks indicate that Apple will produce these phones in limited quantities initially due to concerns over market acceptance and battery life.
Notablecalls: Expect some pressure on AAPL. While the co is always guiding conservatively, I dont think the mkt is as cautious on Dec qtr as Prudential is.