What gives an Apple investor reason to worry

With Mac sales up and Apple's stock price at a high point, investors are likely in store for even more good news today. But an Android threat looms over the iPhone's market share.

Apple hit yet another milestone when its shares closed at $314.74 on Friday. With its stock already at historic levels, can the company continue to climb even higher?

After today's earnings report, it's very likely that yes, investors will be pleased. Apple is due to reveal its fiscal fourth-quarter 2010 results around 1:30 p.m. PDT. Investors polled are expecting revenue between $17.87 billion and $19.86 billion, and earnings between $3.43 and $4.41 per share.

If Steve Jobs and Co. follow the same pattern of the last few years, Apple will hit those numbers easily or surpass them. It's at the point where Apple having a blowout quarter is just par for the course. And looking at the company's individual businesses, the prognosis is great: Macs are selling incredibly well even amid a less-than-stellar economy, the iPad continues to inspire the competition, and the iPhone will continue to rake in profits. But not all is perfect.

Sure there have been little hiccups--antenna design problems, hard-to-get iPads, and the almost-mythical white iPhone 4 --but none of that seems to have negatively affected investor outlook. What could, however, is the growing Android threat to iOS' market share. The holidays are approaching, and the competition between Apple's iOS and Android is getting tighter and even more fascinating. The biggest question now is not will Android eventually catch Apple in terms of market share, but will Apple be able to keep up?

Market share isn't the only metric that matters, of course. Apple has proven it doesn't need to be a market leader to reap profits . And Apple likes to say it's much more concerned with quality (and profits) over quantity. But those numbers we keep seeing about Android have got to sting a bit. By selling 28 percent of new smartphones over the last six months compared to Apple's 26 percent, Android, which is on dozens of devices from HTC to Sony Ericsson, to Samsung, and more, has serious momentum. Samsung alone has sold 5 million Galaxy S smartphones in four months. But what's to come is potentially nerve-wracking for Apple investors: There are more new Android devices heading to market in time for the holiday shopping season. Guess how many new iPhones are on tap for this holiday? Just one, and it's been out since June.

So, while Apple continues to make the lion's share of profits in the mobile world , to keep investors happy it has to manage to not lose customers to Android, and find new customers through just one carrier (in the U.S. at least). Android phone makers have the same task, but have every U.S. carrier at their disposal, and with many different devices.

In other words, the time is right for Apple to expand to more carriers. By the end of the year, there will be just one iPhone market with carrier exclusivity: the U.S. Will the Verizon iPhone be ready for a January introduction, as has been widely reported? Count Apple investors among those who are keenly interested in this answer.

The good news
Other Apple businesses face much less drama in the coming months. The Mac is doing extremely well. Apple closed out the most recent quarter by selling just under 2 million Macs in the U.S., which put the company at its highest market share in decades , over 10 percent. Though we don't hear much about Macs anymore in light of the white-hot mobile market, the very profitable Mac division will get its due later this week when Mac OS X 10.7 gets previewed and, CNET hears , a new, smaller and cheaper MacBook Air, will be introduced.

Judging just by the number of new iPad-like devices headed to store shelves this fall and next year, the iPad is a hit. But it's been a while since we got real figures that show how well the iPad is selling to customers. Last we heard, Apple had sold 3 million between April and June. Investors will be curious to find out how well summer treated the iPad. And in light of supply chain issues , those numbers will still likely not be a true indicator of the demand for Apple's touch-screen device.

The iPod is the only area that's not showing a lot of growth for Apple; lately it's been in the single digits. But that's partially Apple's own fault by making a phone that functions as an iPod--something the company has acknowledged. The iPod lineup still gets several updates each year, with much of the focus on the iPod Touch, but at around 10 percent of sales it's an increasingly smaller chunk of Apple's business.

We'll be reporting Apple's earnings this afternoon, so come back for the results and our analysis after the bell.

 

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