Based on the Japan Apple puts sales at risk as prices rise

April 20, 2011, 12: 15 pm EDT by Adam Satariano

April 20 (Bloomberg)--Japanese land and the tsunami earthquake probably will weigh on forecasts of Apple Inc. to make a profit in the third quarter, sale prices and gross margins high component and disrupted manufacturinganalysts said.

At least seven analysts expect the disaster to affect the prospects of the company later today. The Japan is a hub for several components of Apple, including flash memory, battery, touch screen glass and resin used to attach the chips. The company, which makes the iPhone, the iPad and the Macintosh computer, has not yet discussed the effects of the earthquake of magnitude 9 on March 11.Apple, the largest company of the market value of technology, was already struggling with shortages of supply when the earthquake. The iPad 2, which begins on the day of the earthquake, sold in many stores. Apple also introduced a version of its iPhone 4 for customers of Verizon Wireless in the last quarter, triggering a further increase in demand. Investors seek to report earnings in the second quarter of today and forecast for judging if aid shortages put a dent in sales. "" People want to know how strong is the supply chain and how to safeguard supplies they have, "said Giri Cherukuri, trader and lead Portfolio Manager for basis of Lisle, Illinois Oakbrook Investments, which manages approximately $ 2.7 billionincluding the shares of Apple. "You want to know if it is temporary or how much time this will affect things."Flash PricesThe price of flash memory, which is the main source of Apple, iPhone, iPad, Macbook Air and other storage devices has skyrocketed since the earthquake. On the spot market, the cost of a flash 64-gigabit chip rose 13 percent to $12.92 since the day where the earthquake.Leadership of Apple in mobile devices makes it the largest purchaser of flash in the world. The company was paying suppliers more secure access to the parties, said Rhoda Alexander, an analyst at El Segundo, California-based IHS ISuppli.The challenges follow what may be the growth in the second quarter more great Apple years. When the company today publishes the results, analysts predict a gain of 73 percent to 23.4 billion in sales on average, according to data compiled by Bloomberg. Estimate of analysts that earnings will increase to $5.39 a share in the period ending March 26 compensation report is the second since the Director General Steve Jobs reinforced side to take medical leave in January. Chief Operating Officer Tim Cook assumed control over the day-to-day responsibilities.Pinching MarginsTo reflect the rising costs of components such as memory flash, Apple can project margins of 35% in the third quarter, said Brian Marshall, an analyst at Gleacher & Co. in San Francisco. During the quarter ended in December, Apple had a gross margin of 38.5%.Marshall joined the analysts of Deutsche Bank AG, Piper Jaffray Cos., JPMorgan Chase & Co., Rodman & Renshaw LLC, Pacific Crest Securities and RBC capital markets by predicting that Apple's outlook is affected by the earthquake.Apple advanced $6.01 to $337.86 yesterday in the Nasdaq Stock Market trade. Shares of the company based in Cupertino, California rose 37 percent last year.Apple is usually released how it gets components and manufactures its products, so any comments will be invaluable for investors, said Cherukuri. It can also highlight the challenges of the other computer manufacturers. Hewlett-Packard Co. and Dell Inc. report their quarterly results next month.Japanese Quake CompaniesThe is crimping growth in technology companies in Japan. Seven of the largest companies of consumer electronics in the country, including Sony Corp. and Panasonic, the operating profit - sales less cost of goods sold and administrative expenses - will decline 31 per cent during the period of six months ending 30 September, estimates Barclays Plc this month.The impact of the earthquake is still too early to determine the technological industry, said Marshall of Gleacher. "We will get answers to the questions in the short term, but I am more afraid of what will happen a few months or quarters on the road, said Marshall, who recommends the purchase of shares of Apple.Despite this, with 59.7 billion in cash and investments, Apple is better positioned than others to pay more expensive for the parties and to manage interruptions, Marshall said. "There will be companies which will be worse that that of Apple,"said Marshall.

-Editors: Nick Turner, Ward Jillian

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles to the tgiles5@bloomberg.net

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