Majestic Research

The Mac Observer

Analysts Expect Strong Q4 from Apple

By Jeff Gamet
Published: October 21, 2008

Apple’s fourth quarter earnings report is scheduled for after market closing on Tuesday, and analysts appear to be mixed on whether or not the Mac and iPod maker will post strong numbers. This will also mark the first full quarter the iPhone 3G was on sale, although the company’s practice of spreading iPhone sales revenue over several quarters will likely keep investors from seeing large gains right now from the combination iPod and smartphone.

Some analysts are predicting Apple will report a strong quarter, despite the company’s low guidance during its third quarter earnings report. At the time, Apple projected its fourth quarter earnings at US$1 per share with $7.8 billion in sales. Since then the company has released new iPod models including a redesigned iPod nano and a thinner iPod touch.

Majestic Research analyst Richard Klugman is among the positive analysts. He expects Apple will report “solid results” thanks to its back to school promotions and an increase in iPod sales, according to Forbes. He added that the lower overall consumer electronics sales could bring Apple’s numbers down.

Some analysts, however, are more concerned about the economy’s impact on Apple.

Based on checks with retailers, BMO Capital Markets analyst Jung Pak thinks Apple’s sales are slowing because of the economy. “Over the past five years of checking Apple stores, we have received consistently steady and/or improving sales comments. This is the first time we have heard store reps describe slowing sales,” he said.

Soleil Securities analyst Daniel Ernst added “While we believe Apple’s market-share momentum has insulated the company from economic pressures to a degree, we do not believe the company’s results this quarter and this holiday will prove entirely immune.”

Looking forward, Apple’s just released MacBook and MacBook Pro updates could help boost computer sales through the holiday buying season. The company could also be planning on updating its iMac lineup again come Macworld Expo 2009 at the beginning of January.

Be sure to check in on Tuesday afternoon for The Mac Observer’s earnings report coverage.

Apple is currently trading in the pre-market at US$96.53, down $1.91 (1.94%).