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Wednesday, August 22, 2007, 06:00 am PT (09:00 am ET)

Fourth quarter Apple Mac and iPhone sales ahead of expectations

Apple Inc. appears headed for yet another rosy fiscal fourth quarter, with sales of both Macs and its new iPhone handset tracking ahead of expectations, an American Technology Research analyst said Wednesday.

Advising clients in a research note, analyst Shaw Wu cited sources who indicate that the Cupertino-based firm's Mac business continues to see strength driven by back-to-school buying and share gains from Windows PC switchers.

In particular, Wu said, demand for the company's high-end MacBook Pros and new aluminum iMacs are robust, causing longer than normal lead times (7-10 days for MacBook Pros and 3-7 days for iMacs) on its online store.

"As expected, the entry-level iMac at $1199 is doing well due to its great value and attractive price point," the analyst wrote, "but what surprises us is the high-end $1799 model is also doing well with 'prosumer' customers attracted to its large 24-inch widescreen LCD that offers full HD (1920x1200) capability."

Meanwhile, there is no evidence that consumers are pausing their Mac sales in anticipation of receiving bundles copies of Mac OS X Leopard in the October timeframe, he said.

Wu has been modeling Apple to sell 1.95 million Mac systems during the current quarter ending September 29th, which would represent 21 percent growth in its computer business. However, his latest round of checks have lead him to believe that this estimate will "likely" prove conservative.

As a result, Wu appears to be joining fellow analysts at RBC Capital Markets, who indicated earlier this month that the company was flirting with the prospect of shipping 2 million Mac systems during the quarter — a milestone it has never achieved in its 30-year history.

In his not to clients Wednesday, the American Technology Research analyst also took issue with reports that iPhone interest had waned in recent weeks, saying sales of the handset remain so strong that Apple will likely exceed its own guidance for unit sales of the device.

"We remain comfortable with our forecast of 770,000 units, above Apple's goal/plan/guidance of 730,000," he wrote. "Our sources indicate that sales are more evenly distributed between Apple and AT&T stores, whereas in the beginning there was a mix towards Apple stores. This could have a minor negative bias on 'bounty' revenue."

Wu maintained his Buy rating and $185 price target on shares of Apple, explaining that the company's strong brand loyalty, integrated product matrix, and proprietary interface technologies present a strong competitive advantage over would-be rivals.

Shares of Apple were trading up 3.48 percent (or $4.44) to $132 in early morning trading on the Nasdaq stock market, helped primarily by a report late Tuesday that said the company had finalized plans with carriers for the European launch of iPhone.