Apple Inc (AAPL)

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08:14 AAPL Apple: Color on quarter (95.34 +2.10)

Credit Suisse notes APPL delivered strong 2Q07 results as better than expected sales of Macs and a favorable component pricing environment combined to deliver upside to both consensus rev and EPS ests. Rev of $5.26 bln was ahead of the Street's $5.17 bln while EPS of $0.87 exceeded consensus of $0.64. Firm says the highlight of the quarter was AAPL's gross margin, which increased to 35.1% from 31.2% in the DecQ driven by a favorable component pricing environment, particularly in NAND flash and memory. Firm is actually reducing their rev ests for FY07 and FY08 to sync with AAPL's accounting treatment of iPhone and Apple TV sales, which will be recognized on a subscription basis over a 2 year life. However, they are increasing their earnings ests for FY07 to $3.56 from $3.21 and FY08 to $4.30 from $3.84 to incorporate improved business mix...

Prudential notes AAPL reported a strong MarQ, with EPS of $0.87 and rev of $5.29 bln. The earnings upside was primarily driven by significantly higher than expected gross margin, attributed to a highly favorable component cost environment. Firm says AAPL's JunQ guidance of $0.66 EPS appears conservative. We believe that Apple will continue to benefit from a favorable component cost environment and are forecasting $0.77 EPS for JunQ on gross margin of 33.2%. Firm expects Mac strength, higher gross margin, and new products ramps to continue to drive earnings upside for AAPL over the next several quarters. Firm raises their tgt to $115 from $110.