American Technology Research analyst Shaw Wu on Wednesday issued a research report that raised estimates for the quarterly financial numbers Apple will reveal on July 13. In the note, a copy of which was obtained by The Mac Observer, Mr. Wu writes: "From our checks with industry and channel sources, we believe AAPL will exceed consensus expectations of US$3.3 billion and $0.30 in EPS [earnings per share]. We believe AAPL will likely show gross margin and EPS upside due to strong sales of Mac OS X Tiger software upgrades."

He increased his revenue and EPS estimates to $3.4 billion and $0.34, respectively, but left his iPod unit forecast at 5.5 million. Of Apple's MP3 player business, Mr. Wu said: "While we believe there is a surplus of MP3 inventory, we believe Apple's inventory issues are minor compared to Creative Technology." That was a reference to a report from last week that revealed Creative has been forced to lower its MP3 player sales estimates for the current quarter.

Looking ahead, Mr. Wu sees Apple's September quarter revenue reaching $3.5-$3.7 billion "due to seasonal strength," with fiscal year '06 revenue and EPS estimates of $15.9 billion and $1.55, respectively. However, he maintains his "Hold" rating on the company's stock and "prefers AAPL shares in the low-$30s" because of "valuation and fundamental concerns. We believe iPod growth will slow due to upcoming tough comparisons and we also see potential risk in its Mac business (70%) with customer confusion on whether to buy now or wait out the two-year transition to Intel processors."