Earnings Preview: Apple Inc. to post 4Q results

AP News
Posted: Oct 15, 2010 5:25 PM
Earnings Preview: Apple Inc. to post 4Q results

Apple Inc., maker of the iPad, iPhone and other gadgets, is set to report fiscal fourth-quarter results Monday after the closing bell.

WHAT TO WATCH FOR: Shipments of Apple's profitable iPhone and iPad devices. Apple started selling the iPhone 4 in China during the quarter that ended in September, which may have helped the Cupertino, Calif.-based company push past expectations. Sterne, Agee & Leach analyst Vijay Rakesh wrote in a research note that he believes Apple may have sold 12 million to 15 million iPhone 4 units in the quarter, more than the 9 million to 10 million he initially predicted.

The analyst also said Apple is faster to ship out new smart phones to online buyers than earlier in the year.

Expect strong shipments of Apple's iPad in the quarter as well. Research firms IDC and Gartner Inc. said Wednesday that interest in the new tablet computer cut into regular personal computer shipments in the quarter.

Rajesh Ghai, an analyst for ThinkEquity LLC, estimates Apple sold 5.7 million iPads in the most recent quarter.

WHY IT MATTERS: Apple is facing increasing pressure in the smart phone business. In the April-through-June quarter, iPhone unit sales were eclipsed by demand for phones using Google Inc.'s Android system. While Apple continues to increase distribution abroad, its customer base in the U.S. is limited because the iPhone is sold by only one carrier, AT&T Inc. So far, rumors that Verizon Wireless will get the iPhone in 2011 remain unconfirmed.

Apple created the modern tablet category when it launched the iPad in April; now the company is sprinting to extend its lead while competitors scramble to catch up. Microsoft Corp. CEO Steve Ballmer has promised Windows-based tablets, but so far there are no solid details. Tablets based on Google Inc.'s Android system are starting to emerge, but they have smaller screens than the iPad's.

WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect Apple to earn $4.06 per share on $18.86 billion in revenue.

LAST YEAR'S QUARTER: Last year, Apple earned $2.77 per share in the fourth quarter on $12.2 billion in revenue. Apple adopted new accounting standards at the start of the 2010 fiscal year; the year-ago figures have been adjusted to be comparable.