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Apple Shares Rally into Earnings

Tech Giant Delivers the Goods

Written by Brian Hicks
Posted October 18, 2007

While talk of the dollar's demise and the near-term collapse of the financial plumbing has sent commodities higher and equities down a bumpy road this week, the one bright spot in it all continues to be tech. That's where shares one of the four horseman, Apple Inc. (AAPL: NASDAQ), continue to climb.

In fact, over the last twelve months shares of the company founded by Steve Jobs have soared 129%. That's up nearly $100 a share.

Take a look:

chart

That run began in January when Apple converged on Vegas. Making a big splash at the Consumer Electronic Show, Jobs surprised the markets introducing both the iPhone and its less successful cousin, AppleTV.

Since then, of course, the company has continued to draw the strength on the bid with its continued innovation and growth sending its share price higher.

But as Apple has proven now time after time, the company is no longer just about computers. Its iPods, iTunes, and now iPhones all bolster the company's bottom line now, adding to its long-time base of computer sales.

That combination has helped to push the company's sales to record numbers this year as Apple has grown every segment of its business.

The company's latest release, Leopard, has only juiced the appetite for the company even more.

Originally slated to be introduced in June, analysts expect that the next generation operating system will give the Jobs and company even greater inroads into the mammoth PC market dominated by vendors using Windows operating systems.

That will give its old computer business another leg up in an area where it is quickly gaining market share.

In fact, according to a report published yesterday by Gartner, Apple's U.S. market share of total PC sales has surged to 8.1% in the third quarter. That's up from 6.2% a year ago, and enough to put the company solidly in third place behind Dell and HP.

Apple Shares Headed Higher

So all of this good news surrounding the California-based company raises the question: How high can shares of Apple climb?

The answer to that, it seems, is much higher--by nearly another 14%.

That is the word at least out of Lehman Bros. this week. Lehman's Harry E. Blount boosted the stock on Monday when he raised his price target to $190, and upped his profit and sales estimates for Apple's fiscal fourth quarter.

"We anticipate that Apple will perform better than expectations," Blount wrote, predicting that Apple will continue to grow its market share with updated versions of nearly its entire product line before the holiday season, including Mac desktops and iPods, among other products.

Part of that test will come on Monday. That's when Apple will report its latest quarterly results. Analysts polled by Thomson Financial expect earnings of 84 cents and sales of $6.05 billion.

Those figures, of course, will give us much a better idea of where exactly Jobs's company is really headed--especially if the tech giant beats expectations and guides higher.

Add into that equation the likelihood of another rate cut by the Fed, and the course higher for its shareholders is practically set.

Story Update: As a follow-up to my story on Monday about the massive insider sales at Countrywide Financial Corp. (CFC: NYSE), the Wall Street Journal is now reporting that people familiar with the matter have said the SEC is indeed probing into the stock sales of CEO Angelo Mozilo.

The informal SEC inquiry of stock sales by the Countrywide chief has been under way for a while, the person said, speaking on condition of anonymity because the probe has not been made public.

Mozilo sold some $130 million in Countrywide stock in the first half of the year through a prearranged 10b5-1 trading plan, which has been called into question by North Carolina State Treasurer Richard Moore.

Word of the SEC inquiry, said Moore, "is good news for investors and sends a clear message that the questions raised are serious."

Since January shares of the nation's largest lender have fallen by more than 50 percent.

By the Way: The NASDAQ continues to lead the markets--even during this week's downturn. Since hitting its most recent highs on October 10, the average is down only 0.06%. The Dow, meanwhile, has lost 1.9% over the same period. As for the S&P 500, its loss has been 1.5%.

Wishing you happiness, health, and wealth,

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Steve Christ, Editor

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