Apple Q4 preview: All eyes on the iPhone gravy train

Summary:The technology giant may be expecting a strong December holiday quarter. But for the upcoming fourth quarter earnings, all eyes are on the iPhone's momentum.

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Analysts have few worries ahead of what is expected to be a strong fourth quarter for Apple. Image: CNET

Apple's fourth quarter earnings hit after Monday's closing bell, and all eyes are on the expected continued success of the iPhone.

Six years along since it first launched and seven iterations of the smartphone later, the wildcard is the latest kid on the block, the iPhone 5c , which reportedly has done little to stir the lower-end of the smartphone market.

The long-awaited devices landed in late September , leading to only eight days of sales counting as part of the latest quarter. After announcing a record nine million sales in its opening weekend — significantly more than the expected six million devices — analysts are expecting a strong quarter to end the company's financial year.

Wall Street is expecting the technology giant to post fiscal fourth-quarter earnings of $7.93 per share on revenue of $36.84 billion.

That's at the higher end of Apple's own estimates, which were revised in an 8-K filing with the U.S. Securities and Exchange Commission in September, days after it launched its refreshed iPhone lineup.

For fiscal 2013, Apple is expected to report earnings of $39.41 per share on revenue of $170.3 billion.

Apple's bread and butter rests on the iPhone's success. The smartphone division makes up about half the company's total revenue. But analysts remain cautious on the state of affairs from its newer, lower-end smartphone sibling, the iPhone 5c. Reports have pointed to Apple pulling back on iPhone 5c production due to low demand. The company historically hasn't broken out sales of its device portfolios, and that isn't expected to change. 

In all, Apple is expected to report 33.41 million iPhones sold during the quarter, based on estimates by Fortune, an increase in sales by almost 25 percent on the same quarter a year ago. For the third quarter, Wall Street was expecting a mediocre 5 percent growth, but Apple delivered a surprise blowout of 20 percent.

In other words, the iPhone as a business unit is still likely powering the company through, despite claims of lack of innovation and market saturation.

The likely continued success of the iPhone is, however, likely to offset areas that are underperforming or losing traction.

Where previous quarters have seen the iPad chip away at Mac sales, a surge in popularity in the company's notebook and desktop range may end up reversing this decline, albeit slightly.

Analysts can't agree on exactly where the trend is heading; specifically if the iPad is cannibalizing sales of its higher-margin Macs.

Fortune's compilation of analyst expectations pegs an average of 4.26 million Macs sold, compared to 3.75 million units sold on the third quarter. Apple is expected to sell 13.91 million iPads during the quarter, down from 14.61 million units on the third quarter.

Should we see a rise in Mac sales and a decline in iPad sales quarter-over-quarter, it may be the first rebound in the desktop versus tablet space since the decline of the traditional PC market began.

Or, what's more likely is that it's a quarterly anomaly that will once again return to "normal" in the coming fiscal first quarter.

Looking ahead to the lucrative December quarter, Apple's fiscal first quarter lands in the middle of the busy holiday season, where it typically sees a healthy bump to its overall sales.

Wall Street expects Apple to report fiscal first quarter earnings of $13.86 per share on revenue of $55.65 billion, up marginally from $54.5 billion in revenue or $13.81 per share a year earlier.

Related:

Topics: Apple

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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