Apple reports its first-quarter earnings this week, and the results could not be more closely watched for signs of the company's health and future.
The story is well-known by now. Shares of Apple's stock, going from $702 in late September to a close at an even $500 last week. That's a 28.4 percent drop in just over four months. Positive results -- and a look ahead when Apple puts out its numbers Wednesday -- could turn that trend.
Apple forecast $52 billion in revenue and earnings of $11.75 per share when it reported its previous quarterly results in October. Wall Street's expecting the company to top that at $54.69 billion and earnings per share of $13.41 based on a poll of 47 analysts done by Thomson First Call.
Those estimates are pared down from the $13.87 per share analysts were expecting ahead of last quarter's forecast, a shortcoming that caused concerns that Apple's growth had stalled. During a conference call with analysts, Apple chalked it up to tighter margins in the creation of its newest products including the iPad Mini, which starts at $329 and is estimated to cost the company around $198 in parts and labor, according to IHS iSuppli.
Making things a bit more complex is that Apple ended its calendar year with a bang, refreshing nearly its entire line of computers and putting out new versions of the iPhone, iPod, and iPad. That's expected to make this quarter -- which has historically been strong due to holiday sales -- a whopper. But it's also raised concerns about the company's performance during the rest of the year, given a long history of product launches that are staggered.
By the numbers
Product-wise, Apple's story remains focused on the iPhone, the company's mega profit driver. Analysts have long been concerned that the average sale price of the device, which has been one of the highest in the business, is set to fall dramatically as the smartphone market continues to mature. That issue has been compounded with the makeup of iPhones people are buying, with many customers choosing to buy last year's model or the one from the year before, which Apple sells at a lower price and profit margin.
Wall Street expects Apple to announce iPhone sales somewhere between 43 million and 53 million. That's up from the 37.04 million iPhones it sold the same quarter the year before, and 26.9 million the previous quarter. In fact, it would be the most iPhones sold during any quarter since the product's release.
For Apple's iPad, which the company refreshed in late October, Wall Street's expecting between 23 million and 25 million units. That, too, is up from 14 million in the previous quarter and 15.43 million in the same quarter last year. It would also top Apple's previous sales record of 17 million iPads from its June quarter last year.
One area to watch on Wednesday is Macs. Why's that? Some analysts are anticipating a possible year-over-year decline in sales, despite product refreshes last year that would point to stronger numbers. That's not necessarily the case, Piper Jaffray analyst Gene Munster said in a note to investors last week.
"The December quarter of 2012 faces a difficult comparison from 2011 as the 2011 quarter had an additional week," Munster wrote. "As a result, we remain comfortable with our down 7 percent year over year estimate, which implies 4.8 million Macs."
Some other estimates expect Apple to beat last year's 5.2 million, including Gabelli & Co., which believes Apple sold 5.3 million computers, which would be an all-time sales record.
That kind of performance would be especially impressive given two things: One is that Apple's iMacs did not start shipping until the very tail end of November and late December for the larger model. The other is possible cannibalization by Apple's growing tablet lineup, which doubled down with the iPad Mini during the quarter.
"We have learned over the years not to worry about cannibalization of our own product," Apple CEO Tim Cook said about just such a phenomenon during last quarter's earnings call with analysts. "It's much better for us to do that than for somebody else to do it."
Apple will report just after the market closes on Wednesday, followed by a conference call with executives at 2 p.m. PT.