Apple Expected to Get a Boost from iPhone

Monday, 21 Jul 2008 | 11:52 AM ET

Apple earnings, which are scheduled to come out after the bell Monday, are expected to fall within a range of 99 cents and $1.17 a share, according to analysts surveyed by Thomson Financial.

Apple Earnings Preview
A look at what to expect from Apple, with Brian Cooley, CNET.com and Mike Abramsky, RBC Capital Markets

On average, those analysts are projecting earnings of $1.08 a share.

Meanwhile, revenue is expected to be between about $7.19 billion and $7.65 billion, according to Thomson, with a mean estimate of $7.37 billion.

Helping to drive Apple sales is the "halo" created by the release of the new iPhone, according to some analysts.

"Global is a key part because the company is too U.S.-centric right now," said Brian Cooley an analyst for CNET.com. "The iPhone is going to be a big part of their global incursion to build the halo and sell more Macs as well as iPhones in many countries."

Although the iPhone is generating a lot of the buzz around Apple, iPhones are not the company's main source of revenue.

"Mac’s are the real engine of the company," said Mike Abramsky an analyst for RBC Capital Markets. "So we want to hear, obviously, a Mac number in the 2.4-2.5 million range."

The hype that surrounds Apple products also helps create revenue and gives it a one-up on it's competitors, said Marc Einstein, senior industry analyst of ICT Practice at Frost & Sullivan Asia Pacific.

iPhone to Drive Apple Earnings
Apple's third-quarter profit is expected to rise. Marc Einstein, senior industry analyst of ICT practice at Frost & Sullivan Asia Pacific tells CNBC's Maura Fogarty and Stephen Sedgwick that the iPhone is a crucial driver for Apple's revenues.

"What really puts Apple apart is the marketing it received, and the publicity is really unprecedented. So I think that is going to give them an edge for the rest of the year," Einstein said.

Despite the expected increase in earnings, there is still a lingering fear among investors because of concerns regarding Apple's CEO Steve Jobs' health, according to a report in the New York Post.

Jobs, a cancer survivor, was reported as looking thinner at the last developer's conference which sparked a temporary lull in Apple's trading partly because there is no set plan for CEO succession.

Take a Bit Out of Apple?
A preview of Apple's Q3 earnings, with Andy Hargreaves, Pacific Crest Securities senior research analyst and CNBC's Jim Goldman

Andy Hargreaves, a senior research analyst for Pacific Crest Securities, said he does not expect Apple to give that much insight regarding Jobs health.

"He is as important to that company as any CEO in America or in the world, so it’s a huge, huge issue, but I’m not expecting the company to make any major comments on it other than to say he recovered from the flu and is continuing to operate very, very healthily right now," Hargreaves said.

  Price   Change %Change


Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • Mad Money's Jim Cramer discusses Micron Technology and how the company gained control over inventory issues. The bears expect the company's history to repeat itself, but Cramer says this time, it feels different.

  • In this excerpt from a live CNBC interview, Warren Buffett explains why it's extremely unusual for a company's directors to vote against executive compensation plans.

  • Mad Money host Jim Cramer says shareholder activism works for every shareholder, and offers his take on the Valeant/Bill Ackman bid to acquire Allergan. The market is better off for these efforts, he says.