Apple Earnings Report Preview Q4 2012: Will The iPhone, iPad Save Sales Until The Holiday Season?

After its successful product launch two days ago, Apple (Nasdaq: AAPL) is ready to report its fourth quarter fiscal results ended Sept. 29 on Thursday. The Cupertino, Calif.-based company hopes to post strong year-over-year growth in all its key product lines, particularly the iPhone and iPad, but investors remain worried that light sales could eat into the company's margins.

Apple's stock has taken a small hit recently after months of continued growth that saw shares peak around $705 in early September. On Wednesday, after reaching $625 early in the day, company shares fell but managed to recover slightly at around $617 by market close, dipping again slightly to $615 in after-hours trading.

Wall Street expects Apple to report $36.27 billion in revenue, with earnings per share of $8.91. Apple's forecast is slightly more conservative than Wall Street's, predicting $34 billion in revenue, with the majority of that cash flow coming from the iPhone and iPad. Last quarter, those two iDevices accounted for 72 percent of Apple's overall revenue.

The vast majority of Apple's Q4 revenue is expected to come from the iPhone, even though the iPhone 5 was only released just days before the quarter ended Sept. 29. After going on sale Sept. 21, Apple reported selling more than 5 million iPhone 5 units in its first weekend. Apple will report how many iPhone 5s it sold in the final six days of the quarter.

“Demand for iPhone 5 has been incredible and we are working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible,” said Apple CEO Tim Cook in a Sept. 24 press release.

Wall Street expects Apple to report selling upwards of 25 million iPhones for the fourth quarter ended Sept. 29, which would be close to the number of iPhones sold in all of Q3, and up roughly 46 percent from Q4 2011. It's important to note that last year's iPhone model, the iPhone 4S, was actually released in October, which occurred well into Apple's Q1 2012.

As for the iPad, Wall Street expects Apple to have sold between 17 to 18 million iPads, but at the company's iPad Mini unveiling on Tuesday, Cook said Apple had already sold 100 million iPads cumulatively. Doing the math, this would mean that Apple would have sold slightly less than 16 million iPad units in Q4.

Shaw Wu, analyst at Sterne Agee, told CNET the 16 million mark was roughly consistent with his supplier checks, "indicating lower build plans ahead of iPad Mini."

"To be conservative, we are trimming our estimate to 15.8 million units," Wu added.

Besides iPhone and iPad, Apple is expected to sell about 5 million Mac computers in Q4, up slightly up from the 4.89 million Macs sold in Q4 2011. In all likelihood, Mac sales will be bolstered primarily by the company's popular MacBook Pro and Air lines, especially the critically-acclaimed 15-inch MacBook Pro with Retina Display released this June.

The iPod, meanwhile, is expected to have sold about 5.6 million units, which is about an 18 percent drop off from the same quarter last year.

Besides sales, profits and revenue, investors are also looking forward to Apple's reports on China and India. Now that the company is free to sell the iPad in China, many expect Apple to see a nice bump in sales from the company's second largest market. As for India, Apple is reportedly eyeing to launch the iPhone 5 in the country next month with a new sales strategy to sell the phone independently from carriers, with hopes to get the device into more hands.

As for the company's recently announced products, investors are likely to prod Cook and other executives about the questionable cost of the iPad Mini. Many hoped Apple to price its new 7.9-inch iPad at a price competitive with tablets from Amazon,com (Nasdaq: AMZN) and Google (Nasdaq: GOOG) -- starting prices for both the Kindle Fire and Nexus 7 cost $159 and $199, respectively -- but Apple decided to price the iPad Mini at a starting price of $329. Investors would like a chance for Apple to explain its rationale and sales strategy for that particular device.

Getting In The Holiday Spirit

While Apple is expected to post a relatively pedestrian fourth quarter, most people are looking ahead to Q1 2013 earnings, which will be the first quarter to include sales from the company's latest and greatest consumer devices, including the iPhone 5, fifth-generation iPod Touch, seventh-generation iPod Nano, fourth-generation iPad, 13-inch Retina MacBook, newly-updated Mac Mini, redesigned iMac, and iPad Mini.

Mark Moskowitz, an analyst at JP Morgan, told investors on Wednesday that next quarter's earnings will be the first true test of Apple's latest product cycle.

"Our view is that September quarter numbers do not matter," Moskowitz said. "Apple can miss or beat. It does not matter. In our view, the two important iPhone and iPad launches set the stage for big numbers to be reported in late January 2013 as relates to December quarter results."

Apple shares fell $1.53 to $615.30 in Thursday trading, or nearly 13 percent below their record high of $705.07 set on Sept. 21.