Apple Inc (AAPL)

[roni]

From George Yared

The news is now official: Apple, Inc (NASDAQ:AAPL) has announced that the iPhone will be ready for customer purchase beginning June 29th. The television commercials have begun, as of Sunday June 3rd, and will be followed by other media advertising. For investors, the next leg of growth for the ensuing years will be in place.

The iPhone will have almost no effect on the quarter ending June 30th, as only two selling days fall into this quarter. Apple intelligently wants to recognize the revenues from the iPhone over a 24-month period, matching the contractual obligations from customers who sign up with the sole carrier provider AT&T (NYSE:T). Apple will recognize iPhone revenues over the two-year period in order to decrease "lumpiness" in its future quarters, as iPhone sales could be seasonal in nature once the initial early adopters are satisfied.

The June quarter consensus estimates are calling for revenues of $5.29 billion and earnings per share of $0.72. The chances are quite good that Apple will beat those numbers if its semi-conductor suppliers are still under pricing pressure, to Apple's benefit. Semi-conductor pricing, however, cannot be counted on long term, and investors will discount any earnings beat if it comes from supplier issues.

The Apple retail stores, all 177 strong are gearing up for the June 29th launch of the iPhone.

I stopped in the store today (Sunday) at the Mall of America in Bloomington, Minnesota. The Mall of America is the biggest shopping mall in the United States. The Apple store is rumored to be in the top five in Apple's retail system. The three members of staff that I spoke with were excited about the iPhone release and their biggest concern was having enough supply for the first 5-6 selling weeks. Nice problem! They indicated to me that, on average, they receive about 100 questions per day from customers asking about iPhone's availability. If the Mall of America is any indication of the rest of the country, the initial sales-through should be huge.

For investors, the iPhone is the next leg of growth for Apple. I believe that analysts estimates are still too low for fiscal years ending September 30, 2007 and 2008. The stock has had a great run up to $122 this year. iPhone expectations may be built into the price for now, but the June and September quarters results could prove to be conservative vis a vis estimates and Apple could next see a $135 price tag ... we'll see .. it should be a fun exercise watching the hype and hoopla surrounding the iPhone release on June 29th ...

Georges Yared is the CIO of Yared Investment Research. For more growth stock ideas please visit the web site.

http://www.bloggingstocks.com/2007/06/03/with-june-29-iphone-launch-apple-ready-for-next-leg-of-grow...