October 22, 2007 4:00 AM PDT

Apple set to report fruits of busy summer

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One of the most eventful fiscal years in Apple's history is coming to a close with the company's financials in unprecedented shape.

After the close of the stock market Monday, Apple is scheduled to report earnings for the fourth quarter of its 2007 fiscal year, which ended in September. With new Macintoshes, new iPods and the first full quarter of iPhone sales to add to the bottom line, the company shows no signs of falling off its torrid pace.

As usual, expectations are high. It was quite a summer for Apple, with new products in its three major businesses and perhaps one of the most important product launches in the company's history. Wall Street analysts think Apple is poised to report revenue just over $6 billion and earnings per share of 85 cents. Apple is notorious for giving conservative guidance to analysts: in July it said it expects revenue of $5.7 billion and earnings per share of 65 cents, just minutes after it exceeded its own earnings per share estimate for the third quarter by more than 20 cents.

Someday, of course, Apple's magical run of the past few years might end--but not now.

Someday, of course, Apple's magical run of the past few years might end--but not now. The iPod's role in Apple's profits is already an old story, but the introduction of new units across the board in September might have given a slight boost to sales, although the majority of those new music players aren't expected to sell until the holiday season. This quarter, the focus is on Macs and the iPhone.

Mac shipments are surging. IDC reported Tuesday that Apple is the third leading PC company in the U.S., trailing Dell and Hewlett-Packard by a significant margin but leading Toshiba and Gateway. Rival researcher Gartner somehow counted several hundred thousand more Mac shipments in the quarter than IDC did, but anyway you slice it, Macs are selling.

Apple always tends to do well during the back-to-school shopping season, and this year it introduced shiny new iMacs right as students were gearing up for college. As with the rest of the industry, however, notebooks are driving most of the growth. Expect Apple to report having sold around 2 million Macs during the quarter, up from 1.8 million last quarter, according to financial analysts.

The company is also getting ready to introduce Mac OS X Leopard, the next version of its operating system, later this week. It doesn't appear many analysts and Apple followers are worried that Leopard's pending debut caused a slowdown in demand, but Leopard could provide a boost for Mac shipments around the holidays.

Investors will also be watching for iPhone shipment totals for the quarter. Over the weekend of September 9, Apple reported reaching its goal of shipping 1 million iPhones since the device was introduced on June 29. But how many did it sell after the infamous price cut?

When Apple dropped the price of the iPhone by $200, angering early adopters and forcing the company to hastily offer a $100 store credit in apology, one of the reasons given by the company was that it wanted to attract a broader group of customers. On the other hand, a cynic might say Apple had exhausted the pool of early adopters who would have paid anything to own one of the first iPhones, and were just settling in at the natural price for the iPhone.

All eyes on iPhone numbers
But either way, the iPhone is more attractive at $399 than it was at $599, and the shipment number will be one of the single most anticipated numbers in Apple's earnings release. Piper Jaffray thinks Apple will report having sold 1.05 million iPhones, while Bear Stearns has slightly more conservative expectations of 1.02 million units.

Apple may also provide some details on its revenue-sharing agreement with AT&T, said Gene Munster of Piper Jaffray. In a research note issued this week, he predicted the arrangement could add around $10 million in revenue, which isn't much in a pool of $6 billion but could shed some light on exactly how much revenue Apple is getting per handset. To date, the company has confirmed it is has a revenue-sharing agreement but hasn't publicly shared the exact details.

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Unlocked iPhone to be available in France.
Switzerland's "SonntagsZeitung" reported Sunday (Oct. 20) that iPhones sold in France through Orange would have to comply with consumer's rights laws of France by suppling in addition to the "locked" Orange version an "unlocked" version which would allow cell phone subscribers to use the cell phone provider of their choice. This "Naked iPhone" comes at a price though as it's expected to cost over $1,200.
Posted by imacpwr (456 comments )
Reply Link Flag
Nice... very nice.
For a "niche" company, that sells little-to-no servers at all, to rank 3rd, just behind two companies that make a very hefty portion of their income from selling servers? Very nice.

Posted by Penguinisto (5042 comments )
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makes most of its money from...
things that have nothing to do with computers
Posted by pfletcher (88 comments )
Link Flag
Why rain on the parade?
Even as Apple performs better than it has in more than a
decade, Tom Krazit cannot resist anticipating its failure. When it
comes to that company, he is given to schadenfreude.
Posted by J.G. (837 comments )
Reply Link Flag
mainly because
they run a tightrope act and eventually they will run out of gullibles who will accept paying a high price for coolness - it already started with the iPhone
Posted by pfletcher (88 comments )
Link Flag
For the ordinary Chinese people
The ordinary Chinese people also seem to enjoy the benefits, consider the cities of second class, a city the pursuit of fashion.
Posted by xxczxd (10 comments )
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