Tech Check

No Stoppin' Apple

Apple Store

Rest up weary tech investors because come Monday afternoon, Apple might offer up the ultimate party.

We touch on Apple's remarkable story throughout every quarter, but earnings provides the chance to back up so much sizzle with a whole lot of steak, they put meat on the bone, show the fire beneath all that smoke, and give Macolytes the chance to stare down the non-believers.

And laugh.

It's been a crazy earnings season so far, with blow out quarters from Intel, IBM, and eBay and strong numbers from Google, but investors flee on the news (except for eBay.) Does Apple run the same risk? Unlikely.

Apple has captured a kind of perpetual motion in the market completely elusive to all others who have tried to match its performance. Monday's numbers should be a knock-out, but longer term, there simply is no better company in a better position than Apple.

How can I say that?

Consider that sales are growing, Apple has a cash war chest of $35 billion (more than Cisco, Microsoft, Google, GE, etc.) and yet it only claims 4 percent of the global PC market. Mac sales of 3 million units a quarter are the best in the company's history, iPhone continues to soar. Heck, iPod is an incredible story even after all these years. And yet, Apple still has enormous global opportunities ahead in both Macs and smart phones. It borders on the mind-blowing.

Oh, and there's that other little piece of hardware on the way. Something about a tablet? (More on that next week.)

We don't even know what it is or what it will look like and yet various analysts say if it's released, as rumored, in March, it'll generate at least $1 billion this year.

Then there's the software side of the business: MacOS, App Store.

Microsoft's Steve Ballmer can crow all he wants about the 300 million PCs that'll sell this year running Windows 7, but none of them carries the magic-in-a-box Macs do, nor can Microsoft — or anyone else, tout the kind of growth Apple enjoys.

Naysayers will dismiss all this discussion as "fanboy drivel," or complain that those who accentuate Apple's positives have "drunk the Kool-Aid," and my answer to them is simple: Look at the fundamentals. Look at the growth, the margins, the cash, the lines at Apple stores. When all (or even any?) of those begin to shrink, I'll be the first to step up and call attention to it. Deutsche Bank took Apple off its short-term "buy" list this morning, and we'll see Monday if that was prescient or problematic.

With that as the backdrop, let's talk numbers: The Street is looking for GAAP earnings per share of $2.06 on $12 billion in revenue. Gross margins should be around 36 percent.

For Apple's fiscal second quarter, don't be alarmed by its historically conservative guidance, with the Street looking for $1.75 and $10.3 billion in revenue.

On a unit by unit basis, 3 million Macs (and that would be an 18 percent jump from Q4 last year); 9 million iPhones (more than double the number from Q4 last year); and 20 million iPods. 

There's a lot of optimism here. Almost a froth. That might be behind DB's downgrade today. Monday should offer a good look into just how far along Apple has come, and how far it has yet to go. And then there's the event Wednesday. Monday could be the strong jab to the forehead; Wednesday the upper-cut to the chin as Apple continues to try to knock out the naysayers.

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