Apple Inc. 's fiscal fourth-quarter results come out after markets close on Tuesday.
It has been a roller-coaster couple of weeks for the world's most valuable technology company, which lost its co-founder and creative mastermind Steve Jobs just one day after launching the latest version of the iPhone. Over the weekend, Apple reported sales of four million iPhone 4S units during the first three days of availability, which is more than double the iPhone 4 opening weekend sales, and about one million more units than most analysts expected.
With the company's share price riding high, analysts will be looking for five things from Apple's quarterly numbers.
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1. The Apple effect
This week, BGC Financial senior technology analyst Colin Gillis took the rare step of downgrading Apple shares from "Buy" to "Hold." Mr. Gillis didn't see anything fundamentally wrong with the company. Instead, with shares trading at about $420 (U.S.) each – close to the all-time high – Mr. Gillis said expectations were running just a little too high.
"With the largest market capitalization for a U.S.-based company at $391-billion, any hiccup in its growth is likely to provide an opportunity to add to positions at a better price," he wrote in a note to clients. "The company has to constantly set records just to meet expectations."
For years, Apple has set almost embarrassingly conservative guidance for its quarterly earnings. As a result, it has consistently blown away analyst estimates. But that trend may be coming to a halt. The benchmark for Apple is no longer whether it beats expectations, but by how much. If it doesn't leapfrog the estimates by a fairly wide margin, the stock could take a short-term hit.
2. iPhone numbers
Apple's blockbuster iPhone 4S sales figures won't have much of an impact on the previous quarter, but there may be a bit of a spillover effect anyway. During the last quarterly conference call, Apple said it was giving particularly conservative guidance because of the effects of a pending product launch (which turned out to be the iPhone 4S). The concern was that, with a new version of the phone on the way, fewer consumers would opt to purchase what was about to become a dated model. Whether that concern proved correct or not will be evident from how many iPhones the company sold during the last quarter.
3. iPad numbers
With no serious competitors in the tablet space, the iPad probably continues to sell out everywhere. Analysts are expecting shipments of about 12 million or 13 million. Don't be surprised if Apple manages to beat those numbers.
4. The halo effect
With all the frenzy surrounding iPad and iPhone sales, Apple's unsung product heroes have gotten little attention. Investors should keep an eye out for app and media purchases through iTunes, as well as Mac sales numbers. Those categories will go a long way toward showing whether Apple's astounding mobile device sales are helping to lift all its other products.
5. The end of the iPod
The iPod's popularity has been waning for years, and this may be the moment for Apple to finally announce an end date for the product line. It probably won't have too much of an effect on the bottom line, but the end of the iPod will also mark the end of the product line that kick-started Apple's rise from also-ran to the most valuable technology company on earth.