Apple's Gunning for Records with September Quarter

As analysts line up their predictions for Apple's (AAPL) upcoming quarterly earnings report, one thing stands very clear; records are made to be broken. In the quarter that saw the continued success of iPhone 3GS, price cuts on Mac Computers and a slew of upgraded or new iPods, the company is firmly poised to deliver its best back-to-school season ever. Apple's typically conservative guidance for this quarter called for earnings in the range of $1.18 to $1.23 in profit/share on sales of $8.7 to $8.9Billion.

Standing in stark contrast are analysts with Revenue figures at $9.2Billion and profits of $1.42/share on average. Apple over the last few years has beaten earnings expectations by a staggering 39% and Revenue by 7%. Perhaps the analysts have caught up this time? Not yet. 90 days ago, the average estimates stood at $1.27 and have climbed since to $1.38 and where they currently stand at $1.42.

But, since when do analysts really have a handle on the hot trends of the day? The Apple generation of the 2000s has grown up with iPods as a must-have, the Mac as a must-have college tool and now the iPhone as the mind-share capturing device. But analysts, like most things, come in all shapes and sizes, and estimates, certainly for Apple, can vary wildly.

On the Computer front, expectations have risen for Apple to sell upwards of 2.8Million machines, a new record for the company.A year ago, that number was 2.6Million. While iPods are slowly an eroding business, another 10Million units are expected to cross hands, and the stunning growth of the iPhone business will continue with estimated sales of about 7Million units.

While Apple's been dropping prices on Macs and iPods to maintain sales and grow share, it has plenty of room to keep margins steady, as the iPhone is by all accounts a profitable monster, and the launch of Snow Leopard software adds to the margin story. Taken altogether and the pros are calling for continued sales success at Apple.

Whether the market believes it too is the next test.

Disclosure: Author owns AAPL

Comments

[NDinMSP:]

iPod sales are indeed slipping, but don't forget that an iPhone is also an iPod. And Snow Leopard won't really reach its full potential until software developers begin to take full advantage of the parallel processing and 64-bit architecture.

Oct 19 04:32 PM

[Constable Odo:]

Yeah, iPhones are iPods with higher margins. That's a plus.

Oct 19 06:15 PM

[mollytjm:]

you're right! most analysts really don't 'get' technology companies. i think they're puzzled by the rapid growth of Apple. They've failed to notice entire families walking around with ipod buds in their ears at the mall, at the beach, at the movies.... and they don't notice that in a movie theater of maybe 15 people...now at least one of those people will have an iPhone...and even the person working the concession stand will be sneaking peaks at their own new iPhone.
if people invest in technology without being an observer of human behavior, then they probably don't invest very well. i live on a street that dead ends at an elementary school... those little kids go walking by and even THEY have ipods. What do you think they'll have in middle school? High school? College? This is their technology and they're use to it working seamlessly.
Apple's closed system allows for that and no one else's really does.
The upcoming generations have no idea why Bill Gates was in an ad buying shoes. (well, neither did I...talk about a dumb ad) But the point is that Apple knows how to talk tech to tech savvy people...and anyone who grew up on Intendo is bound to be tech savvy.
Apple will be here in the future because it understands the future.

Oct 20 10:06 AM