AmTech: Apple \'rare\' company building customer trust

"We are not too bothered as we believe most of the weakness was seasonal and from our checks, Apple's sales representatives have been instructed to not push PowerPC Macs [on] customers who want to wait for Intel Versions," analyst Shaw Wu wrote in a research note to his clients early Thursday morning. "In this day and age where making numbers is important, we believe Apple is in a rare group of companies willing to sacrifice its near-term revenue opportunity for greater longer-term success by developing customer trust."

The Wall Street analyst said Apple is now well-positioned to deliver upside to its earnings with strong second half seasonality and powerful product momentum moving forward, which will include a new low-cost Intel widescreen notebook (MacBook) and changes to its iPod line.

Wu, who accurately predicted that Apple would report its second strongest quarter in its corporate history, noted that the company's results fell above guidace. However, he said the "big surprise" was the Mac maker's gross margin of 29.8 percent versus his forecast of 27.8 percent. Apple's gross margins were largely impacted by more favorable NAND flash pricing throughout the quarter.

"We find this interesting as there was speculation on where Apple would benefit or suffer from rapidly dropping NAND flash pricing given its $1.25B in long-term supply contracts," the analyst commented.

As Wu hinted in previous commentary to clients, Apple on Wednesday indeed made another attempt to reset investor expectations with conservative guidance for its June (this) quarter. "For the June quarter, Apple guided below consensus in we think another attempt to reset unrealistic consensus revenue expectations," he wrote. "We are leaving our estimates (with options expensing) unchanged at $2.00 for fiscal year 2006 and $2.45 for fiscal year 2007.

Shaw Wu and American Technology Research maintained their Buy rating on Apple shares with a price target of $101.