The question still looms heavily as Apple Inc. (NASDAQ:AAPL) stands to report its first quarter earnings on Wednesday. Will Apple report show the record sales numbers that Wall Street’s analysts predict even as the stock has plummeted? A 28.4 percent drop in just four months of trading is no small devaluation. Market competition from its own ever-diverging lines of devices and the strengthened position of its competitors make the question all the more complicated as analysts have scrambled to find answers.
And investors have been following the events that lead up to this week’s announcement with baited breath, hoping to hear positive signs about Apple’s (AAPL) overall health and future. There are still several signs that point to good news for those who have stuck with the tech stock to come Wednesday.
The first is that the $52 billion in revenue and earnings of $11.75 a share are expected to be topped this time around with numbers of $54.69 and $13.41 according to a poll of 47 Wall Street analysts conducted by Thomson First Call.
Sure, they’re a little smaller than original estimates of $13.87 a share, but they’re still nothing to sneeze at. Tighter margins on the Apple (AAPL) iPad mini and other new products have brought that number down a bit, but not to levels that should leave the stock trading at below $500.
The real complexity in figuring out which way the report will go lies in the late season releases of new iMacs, the iPhone, the iPod and the iPad. Refreshes on the entire range of product means that earnings this quarter Apple (AAPL) could be higher than ever before.
The problem with exponentially good news for this quarter might mean trouble for the rest of the year, as the company has a history for bringing in good results every quarter with product launches that are purposefully staggered. One thought analysts haven’t yet considered: the lack of staggering might also mean that Apple may plan to launch other products it expects to be marketplace forces in the coming months instead of relying on the lines it’s already established.
Another issue that comes into play is the maturing smartphone market, as consumers are becoming less likely to pay premium prices for the devices that have been Apple’s (AAPL) bread and butter for the better half of a decade. Add in the fact that many people are buying cheaper, older iPhones, at a lower margin for Apple, and those record sales numbers might not mean as much as numbers from less lean times.
Sales of iPads are also up over last quarter and and last year and estimated to be within the range of 23 and 25 million units, topping Apple’s sales record of 17 million last June. And even though the iPad mini profit margin is a little slimmer, it shouldn’t affect these numbers as greatly as speculated for the iPhone product line.
The real product to watch in the future may end up being the recently updated line of iMacs, which have not only seen supply-chain issues but may very well be the best product to place in the seat of the proverbial “mine-shaft canary.” If Apple (AAPL) can drive any sort of sales numbers on these that beat Gene Munster’s prediction of 4.8 million Macs against the odds and competing competition from tablet devices, alongside its other numbers, then the firm stands a great chance to rebound to original valuations or beyond.
Disclosures: None
