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Thursday, July 20, 2006

Most Widely Traded 48 Hour Clock: Apple's Choppy Forecast

The Apple's numbers for its fiscal Q3 which ended July 1 had a jaw-dropping quality to them. Number were that good. Net income was up to $472 million from $320 million a year ago. Revenue hit $4.37 billion. iPod sales rose to 8.11 million and sales of Macs hit 1.33. million.

But, although the news drove Apple's shares up almost 8%, the news is not as rosy as it seems. iPod sales dropped from the immediately previous quarter, when they hit over 8.5 million units. Quarter-over-previous quarter growth of the popular multimedia device may be slowing. While sales of portables rose from the quarter from January to March going from 498,000 to 798,000, sales of desktops fell from 614,000 to 529,000. The affects of the new Intel-based products may be a bit overrated.

Perhaps the most important number Apple gave out was its forecast for the current quarter. Revenue will be $4.5 to $4.6 million, not much of an increase over the quarter just reported and below Wall Street's hopes of $4.9 million

Apple's grip on the PC market is still weak, running at 4% to 5% of the US market depending on which market research company supplies the numbers.

The fact that the forecast for the quarter ending in September is modest may be due to the fact that no new versions of the iPod are expected until much later in the year. But, it also means that Apple does not expect much growth from the Mac.

Perhaps that is why, even with Apple's 8% increase to nearly $59, it is still way below its 52-week high of $86.40. The market needs more convincing.

Douglas A. McIntyre can be reached at He does not won securities in companies he writes about.

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