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Monday, April 03, 2006, 07:00 am PT (10:00 am ET)

Apple clearing inventory before debuting new products?

Apple Computer is expected to offer conservative guidance for its current fiscal quarter while the company works to clear inventory of several existing PowerPC Macs and iPod nanos, analysts for American Technology Research said this week.

"With the Intel transition and high inventory of older iPod nanos, our sources indicate that Apple is aiming to work down inventories, particularly PowerPC Macs (iBook G4, 12-inch and 17-inch PowerBookG4s, PowerMacG5) and 2GB/4GB nanos in front of potential future product announcements," analyst Shaw Wu told his clients early Monday morning.

Citing his own sources and checks, Wu also said Apple's guidance for its June (current) quarter will likely be conservative when it is reported later this month, in the range of $4.3 - 4.4 billion.

As a result of his findings on inventory and forthcoming guidance, the analyst trimmed his June quarter estimates to $4.4 billion in revenue, 44 cents in earnings-per-share (EPS), and 8.5 million iPods, down from $4.8 billion, 48 cents and 10-11 million iPods.

"For the March quarter, we believe Apple will likely beat its guidance of $4.3 billion and 38 cents, therefore leaving our forecast intact at $4.4 billion and 43 cents, Wu wrote, noting that the market consensus is at $4.6 billion and 44 cents.

The analyst left his 2007 fiscal year estimates unchanged at $22.1 billion in revenue and $2.45 EPS under the belief that the Intel transition will be mostly completed by that time with "Apple benefiting from new product momentum, including Mac OS X Leopard and new digital entertainment products."

American Technology Research maintains a Buy rating on Apple shares with a price target of $101.