Apple earnings on the horizon

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Apple gives the outside world a look at the company’s finances this week when it announces its earnings for its fiscal second quarter, the three-month period beginning in January and ending in March. Apple’s second-quarter earnings call will begin at 2 p.m. Pacific on Wednesday. As always, Macworld will have live coverage of the earnings announcement.

Of course, the last time Apple pulled back the curtain, it reported a $1.58-billion profit on record sales of both Macs and iPods during its fiscal first quarter.

So, naturally, Wall Street pummeled Apple’s stock.

Look, I just tell you what happened—why investors do what they do is heaven’s own little mystery. But, in addition to concerns about the slowing rate of growth in iPod sales, investors also apparently didn’t care for the fact that Apple’s guidance on its second-quarter performance didn’t match what Wall Street analysts were predicting. (Our friends at explained quite effectively why that was nonsense.)

Are we in store for more up-is-down, good-is-bad logical contortions with Wednesday’s second-quarter earnings announcements? I’ll leave the market-moving prognostications to others. Instead, here’s what I’ll be looking for during the big reveal.

The numbers game: Quarterly earnings announcements can basically be boiled down to two questions—1) How’d you do this year relative to the same period last year? and 2) Did you do what people expected you to do? Answer both questions in the affirmative, and you should be sitting pretty.

As to the first query, Apple recorded earnings of 87 cents a share on sales of $5.26 billion for the year-ago second quarter. Apple’s supposedly disappointing guidance for this year’s second quarter, which I mentioned above, is earnings of 94 cents per share and $6.8 billion in revenue. If Apple hits that target, that would be an improvement in both earnings and revenue over last year’s performance.

Of course, analysts expect Apple to top its own forecast. A glance at the analyst estimates tracker at Yahoo Finance shows a consensus earnings estimate of $1.07 a share on sales of $6.95 billion. We’ll see Wednesday if Apple can meet those expectations.

Laptop figures: It’s not exactly controversial to suggest that much of Apple’s recent good fortune for its Mac business—three consecutive quarters of record Mac sales—has been driven by its laptop business. Apple has sold more than 1 million laptops in each of the last three quarters, so it will be interesting to see if that trend continues—especially since the company introduced the MacBook Air during its fiscal second quarter. While Apple doesn’t break down its Mac sales by specific product type, you would have to wonder if the introduction of the Air can spur an improvement over the 891,000 laptops sold in the year-ago second quarter.

iPod prospects: As mentioned above, investors are concerned that iPod mania may be on the wane. It’s not that Apple is selling fewer music players than before—remember, it sold a record amount in the first quarter of 2008—but that the rate of sales growth has begun to peter out.

Apple made two moves during the second quarter that seemed aimed at spurring iPod sales. It boosted the capacity of the iPod touch to 32GB. And on the low end of the iPod spectrum, it added a 2GB iPod shuffle while cutting the price on the 1GB model. It will be interesting to see if those moves lead to much of a gain over the 1.05 million iPods Apple sold in the 2007 second quarter.

Besides sales growth, there’s another iPod number to keep an eye on—average selling price for the music player. In the first quarter, that figure was $181, the highest it’s been in a year-and-a-half thanks in large part to the touch’s higher price tag. Growth in iPod touch sales could push that figure higher, assuming that the lower price of the shuffle doesn’t drag down the average.

Ten million or bust: OK—I’ll make one prediction. Analysts will look for any indication of Apple’s ability to meet its stated goal of selling 10 million iPhones by year’s end. Part of that will focus on whatever sales figures get announced Wednesday, but there will be a lot of attempts to get Apple to tip its hand about its plans to bring the phone to more markets. Look for the reported deal to bring a 3G iPhone to Italy to come up in Apple’s Q-and-A session with analysts (and look for Apple executives to stay tight-lipped on the subject).

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