Apple’s quarterly earnings: What to look for

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Now that we’ve all gotten over being glued to the television/radio/Internet to watch the inauguration, it’s time to move on to the next major event of our times: namely, Apple’s fiscal first quarter financial results. The numbers for the October-to-December quarter, which encompass the 2008 holiday season, are due to be announced Wednesday afternoon, followed by a 2 p.m. PT conference call in which Apple executives break down the results.

As always, we’ll be jacked in, listening to the stream of numbers from chief operating officer—and acting CEO—Tim Cook and chief financial officer Peter Oppenheimer. You can follow along to all the nitty-gritty details at our liveblog. But allow us to take a a moment to call out a few items that might be of particular interest amongst the hail of facts and figures.

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1. Something D-O-O economics

Even with the current economic downturn, Apple’s been doing pretty well. In the last conference call, back in October, Steve Jobs discussed the company’s position vis-a-vis the economic situation. Jobs and crew shied away from making forecasts about the economy, but they did stress certain points, especially the fact that Apple’s hefty cash reserves—which at the time were sitting around $25 billion—would enable the company to invest its way through the downturn and even take advantage of opportunities presented. In particular, Jobs pointed out that Apple spent a lot of the last economic downturn investing in research and development, suggesting obliquely that the company might do the same now.

Three months later, the question will be where exactly the company stands as the economy continues its downward trend. Of course, it’s still early days, to be sure, but the results will give us another data point in how Apple is weathering the current financial climate.

2. Macs for sale

Apple introduced its new line of notebook computers at the beginning of the quarter, just in time for the holiday season. The executive team is fond of repeating that the current line-up of products is the best Apple’s ever had, and we expect the same proclamations from them this time around. But the proof is in the MacBook pudding. Will Apple log yet another quarter of record Mac sales, or will reduced consumer spending put a dent in new computer purchases?

Just for comparison’s sake, Apple sold 2.3 million Macs in the fiscal first quarter of 2008—a record for the December quarter. Apple has set a new record for Mac sales in five of the last six quarters heading into the 2009 fiscal year.

3. A very iPod holiday

For iPod sales, there’s nothing bigger than the holiday quarter: Apple’s first quarter figures are always the highest of the year, usually by a pretty hefty margin. In recent years, growth in iPod sales has been slowing; this year the product line sustained only minor changes and, combined with the conservative consumer climate and the introduction of the iPhone 3G, that may mean that the iPod is shifting into the afternoon of its lifespan.

4. Mind the GAAP

One move that grabbed attention during Apple’s financial announcements last quarter was the news that the company would begin distributing a second set of financial numbers that didn’t comply with the Generally Accpted Accounting Principles (GAAP). The reason behind the move? Since Apple was accounting for the iPhone on a subscription basis—meaning that revenue was recognized over the estimated 24-month lifetime of the product—the company didn’t feel that the GAAP numbers painted an accurate picture of iPhone sales.

Apple has pledged to release these non-GAAP numbers alongside the usual figures every quarter, so keep an eye on them to get a more intelligible view of just how much money Apple is actually making on iPhones. If last quarter's numbers are any indication, we’re guessing it’s going to be pretty darn impressive.

5. Parry, dodge, spin!

Much as we don’t look forward to the repeated questions about Jobs’ health, it seems unlikely that analysts will refrain from asking about it, especially in the wake of the CEO’s recent announcement that he would take a leave of absence until June. From Wall Street’s perspective, it affects how brokerages give their investment advice; we just hope analysts pose their queries with a reasonable amount of diplomacy. Regardless, though, we expect Cook and Oppenheimer to field such questions with the company’s standard response that the CEO’s health is a “private matter” and to avoid any sort of forward-looking statement on the matter.

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