Apple Beats Expectations Again

Way to go, Apple (Nasdaq: AAPL  ) ! You crushed Wall Street's profit targets yet again.

No, you didn't snooze through Apple's fiscal fourth-quarter report. The earnings report is now just hours away, but I figured I'd spill the beans to get ahead of tonight's bandwagon that will be rich with gushing headlines. The pros think Apple's earnings will climb by 39% to $0.86 a share. I suggest that Steve Jobs' company will obliterate that target.

It shouldn't even be close, really.

I'll confess that I'm not modeling the company's forecast performance by plugging numbers into elaborate spreadsheets. That's the way Wall Street does it, but have you seen those report cards? Analysts have come up short in each of the past 18 quarters.

There is reason to believe that this will be No. 19 in Apple's quarterly itinerary of spanking the incompetent bean counters. I'm not going out on much of a limb with my early precinct projection, my friend.

An Apple a day
Apple continues to gain market share in the personal computing space. You don't see Dell (Nasdaq: DELL  ) or Hewlett-Packard (NYSE: HPQ  ) wrestling that back. They say Apple commands a niche audience -- yet why is it that Apple products are at the top of the (often updated) best-seller list whenever I check it on Amazon.com (Nasdaq: AMZN  ) ?

Nobody rolled out an iPod killer during the quarter, either. The platform is far too entrenched to be unseated by new Zunes from Microsoft (Nasdaq: MSFT  ) or a new line of slick SanDisk (Nasdaq: SNDK  ) MP3 players.

More important: Let's take a peek at how the pros fared during the most recent quarters.

Est.

EPS

Surprise

Q4 2006

$0.51

$0.62

22%

Q1 2007

$0.78

$1.14

46%

Q2 2007

$0.64

$0.87

36%

Q3 2007

$0.72

$0.92

28%

Apple has become the New England Patriots of Wall Street. It doesn't just win. It trounces. Why should the pros be any smarter now than they were when they consistent underestimated the company's bottom-line potential over the past four-and-a-half years?

You only have yourself to blame if you settle for $0.86 a share tonight. You should be thinking $1.05 a share if the company clocks in ahead by 22% the way it did a year ago. It's OK to dream bigger than that, as that's the way the upside surprises have gone since then.

The trend is your friend
I realize streaks have to end sometime. But just as it was easy to predict Intuitive Surgical would have a blowout quarter last week -- seeing that the surgical robotics specialist has now crushed Wall Street numbers for 20 straight quarters -- you don't bet against the trend.

Did you see any dark clouds through the end of September? Maybe you did.

  • Apple TV is a dud.
  • The iPhone had a desperately quick $200 price cut.
  • Apple lost NBC from its iTunes store, which accounted for 30% of its top-selling TV shows.

Is that the best you can do, bears? Those aren't material items to weigh the company down when MacBooks and iPods are selling like -- well -- MacBooks and iPods.

Enjoy tonight's win, Apple bulls. It's a surprise that should take no one by surprise. Unless, of course, you're an analyst.


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