Monday, October 17, 2011

Apple Inc. (NASDAQ: AAPL): Q4 Earnings Preview 2011

Apple Inc. (NASDAQ: AAPL) is scheduled to release its fiscal fourth-quarter earnings after the closing bell on Tuesday, October 18, 2011. Analysts, on average, expect the company to report earnings of $7.28 per share on revenue of $29.45 billion. In the year ago quarter, the company reported earnings of $4.64 per share on revenue of $20.34 billion. Tuesday’s earnings report will be the company’s first since the death of co-founder and chairman Steve Jobs, who passed away recently following a protracted battle with cancer.

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide.

In the preceding fiscal third-quarter, the Cupertino, California-based company's net income was $7.31 billion, or $7.79 per share, from $3.25 billion, or $3.51 per share, in the year-ago quarter. Revenue soared 82% to $28.6 billion for the quarter. Analysts, on average, expected the company to report earnings of $5.73 per share on revenue of $24.75 billion.The company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.

At its last earnings call in July, Apple forecast revenue of about $25 billion and earnings of about $5.50 per share. 

Apple continues to make innovative devices which appeal to consumers in a big way. The company is expected to post strong profit and revenues in the latest quarter, benefiting from the sales of its tablet computer iPad as well as the latest version of its wildly popular smartphone, iPhone. Their iPhone sales are nowhere near their maturity and are still in the growth phase. Additionally, enterprise support for iPhone has continually increased.The iPads are just in their infancy. The Mac too is on the move, taking market share from the Windows crowd quarter after quarter.The solid performance of Apple's fast-expanding store base also provides a positive feedback loop in terms of attracting new customers. Apple’s push into ads and TV could become big new sources of growth.

The main driver of sales in the quarter will be the iPhone and iPad. The iPad currently rules the tablet market. Sales of the Mac computer are expected to get a boost from the back-to-school season, while the iPod may continue to show a decline. The  company recently released its latest iPhone, the iPhone 4S in 7 countries. The company plans to launch in 22 additional countries on Oct. 22. The company sold more than four million iPhone 4S's in the first three days of sales, the most ever for any iPhone launch. Apple expects the iPhone 4S to be available in 70 countries by the end of 2011. However, the new iPhone will not be included in the results for the company’s fourth fiscal quarter, which closed at the end of September.

Apple also launched the latest version of its mobile operating system, iOS 5, last week. In its statement Monday, the company said more than 25 million customers are now using the latest update to the software, and 20 million of those have signed up for the company’s iCloud service, which provides online storage and synchronizing services.

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