Five things to watch for in Apple's earnings tomorrow

Apple is expected to report another blowout quarter, coming off its record-setting fiscal third quarter in July. All eyes are on the company for sales numbers on key products like the iPhone, iPad, and Macs.

Apple is once again expected to top Wall Street's estimates when it reports its fiscal fourth-quarter earnings tomorrow.

The maker of iPhones, iPads, and Macs is expected to post earnings of $7.27 per share on revenue of $29.3 billion, according to a Factset Research average posted by MarketWatch. That's up sharply from Apple's forecast of $5.50 per share on sales of $25 billion, which the company included in its third-quarter results, and even more so from the $4.64 per share on $20.3 billion of revenue the company actually posted during same quarter last year.

Below are some things to look for in the company's earnings release and subsequent afternoon conference call with analysts:

Apple's current iPhone lineup.
Apple's current iPhone lineup. Apple

1. iPhone sales ahead of the 4S refresh
Did people hold off on buying an iPhone during the last quarter with high expectations that the company was set to release a sequel? That will be answered in Apple's numbers tomorrow. The company surprised industry watchers last quarter with higher-than-expected sales numbers for iPhones, clocking in at 20.34 million iPhones, a 142 percent gain from the same quarter the year before.

The iPhone 4S does not count in Apple's fourth quarter, since it ended in September, and the newer 4S model was released Friday. Apple already looks like it's in good shape on the iPhone 4S front with the sales data it announced this morning, with weekend sales north of 4 million units . The device also arrives in 22 more countries before the end of this month. Expect Apple to drop a hint about how confident it is about the launch with any forecast it offers.

2. iPad units surpassing the 10 million mark
All eyes are on Apple to announce its first iPad sales in the eight-digit realm. Apple sold 9.25 million iPads last quarter, more than double from the quarter before, spurred by the launch of the iPad 2 in early March. By comparison, in its fourth quarter last year, Apple sold 4.19 million units of its first-generation model.

Apple

A collection of analyst estimates run by Fortune pegs the average estimate at 11.92 million. That would be well above Apple's performance in its previous quarter, and the first time the iPad clocked in above 10 million units since the product's introduction last year. By comparison it took the iPhone three and a half years to achieve that same sales feat.

As a quick refresher, here's how many iPad units Apple's reported having sold in previous quarters:

2011
Q3: 9.25 million
Q2: 4.69 million
Q1: 7.33 million
2010
Q4: 4.19 million
Q3: 3.27 million (Note: this was the first quarter to include iPads.)

3. Strong Mac sales boosted by Lion, new models
Apple's line of Mac computers has not seen the meteoric growth of the iPhone and iPad, but sales have been growing nonetheless. Likely to add to that during the quarter was the release of Apple's Mac OS X Lion, and new Mac hardware released to coincide with it.

Apple

Apple's Lion software release came near the end of July, and dovetailed the release of a new MacBook Air and Mac Mini models. Both of those computers came with Lion pre-installed, as well as gained an upgrade to Intel's Sandy Bridge processors and high-speed Thunderbolt data transfer port.

A note from Piper Jaffray analyst Gene Munster last month included Mac sales data from NPD covering July and August, up 22 percent compared to the same time period the year before. Munster said he expected that boost, which was due in part to Lion and new hardware, to "fade" during September. In a follow-up note this morning he updated that assessment, saying all three months averaged 20 percent year-over-year growth off data from NPD, with a total estimate in the 4.5 million to 4.7 million unit range.

During this quarter last year the company sold 3.89 million Macs, which was a 27 percent increase from the same quarter the year before. In Apple's previous quarter, which wrapped up in June, the company shipped 3.95 million Macs.

4. How big the cash pile grows
Not a quarter goes by now without focus turning to the mountain of cash Apple has built up. At the end of the company's third quarter it had amassed $76.156 billion in cash and marketable securities on hand, which The Financial Post noted was more than the U.S. government. (Yes, there's a caveat or two there.) As a side effect, there are always a bevy of "what could Apple buy with that much money" lists, the scale of which continues to grow.

To be fair, Apple's use of cash is of special interest when it comes to possible acquisitions. That's become of even higher interest in recent weeks with Siri, the big new feature for the iPhone 4S. In April 2010, Apple acquired a company with the feature's namesake along with its voice assistant application. A year and a half later it was an integrated part of iOS 5 inside the iPhone 4S. Outside of the hardware additions, Siri is the new phone's killer app, and potentially the foundation for the company's future voice efforts in other iOS devices, and Mac OS X.

5. Continued growth in Asia
How much Apple is growing based on sales from Asia is something to watch given Apple's recent successes there. In its third-quarter financial results the company noted China had been been a "key" to the company's success, with Apple selling $3.8 billion worth of products in the region. That ends up being a sixfold increase in sales from the year prior, with the iPhone being a breakout star at nearly quadruple the sales during that same time period.

A crowd of Apple employees outside the company's recently-opened second store in Shanghai.
A crowd of Apple employees outside the company's recently opened second store in Shanghai. Apple

Just before the end of Apple's fourth quarter, the company opened up its new store in Shanghai, which is the company's largest in mainland China, followed a day later (which marked the beginning of its current quarter) with the opening of its flagship store in Hong Kong. Expect the company to talk about its continued retail efforts, and product demand in the region.

Apple reports its earnings after the market closes tomorrow. The company is holding its usual conference call with Wall Street analysts at 2 p.m. Pacific.

 

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