Predicted Optimistic Apple Earnings Preview

Jan. 17, 2011 - PRLog -- Booming sales for the iPhone and iPad over the holiday period are expected to help Apple Inc. report strong double-digit earnings growth for the December quarter next week. Citi is raising 1FQ11 estimates for Apple  to reflect better-than-expected iPhone and Mac sales. Thanks to iPhone sales of 18M units and Mac sales of 4.1M units, it now expects Apple to report revenue of 25.5B and diluted EPS of $5.75. Wall Street, on average, expects the company to report earnings of $5.38 per share, up from $3.67 per share in the same period the previous year. Revenue is expected to soar 55% to $24.3 billion, according to consensus estimates from FactSet Research.

The iPhone is expected to be the main diver. Analysts on average expect Apple to report shipments of about 15.8 million iPhone units — representing a whopping gain of 82% compared with the same quarter last year.

The gain is notable, given that Apple was widely expected to expand the carrier base for the device this year, in particular at Verizon Wireless

Citi expects 1FQ11 GM of 37.3%, thanks primarily to higher-than-expected iPhone shipments and a full quarter benefit of the summer/fall's dramatic declines in component prices. It adds this revised estimate is conservative.

The iPad — which was not on the market at this time last year — was expected to have somewhat of a cannibalizing effect on sales of some of the company’s laptop computers. But that doesn’t seem to be the case. Both Gartner Inc. and IDC reported Wednesday that Apple was one of the few PC makers to see strong sales gains in the fourth quarter in the U.S.

While the iPad may have sold 13M units in its first 9 months as disappointing, Citi's sense is that the Street was expecting sales of 6-7M iPads during 1FQ11. Its checks suggest a figure slightly below the low-end of this range.

It is reported that Personal-computer sales grew at lower-than-expected levels for the fourth quarter. The company reported a gross margin of 36.9% for the September quarter and told investors to expect around 36% for the December period. This low growing caused by more competitors has entered the Smartphone category against the iPhone, and more are expected this year for the tablet space or the increased competition from other devices, particularly the iPad - began to erode market share for traditional PC products.

Analysts' project, on average, that Apple shipped about 4.1 million Macs during the December quarter, which include both laptops and desktop models.

Any way, Apple’s hardware and software innovation, the richness of its app and content ecosystem, even the supported Apple accessories (http://www.pickegg.com/wholesale-apple-accessories.html) suppliers and its time-to-market advantage give it a strong leadership position in mobile computing.

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