Earnings Preview: Apple Expected To Sustain Profit Climb

At the close Monday, Apple was at $571.60, down $1.28, or 0.2 percent, continuing the stock slide since the shares hit an all-time high of $644 on April 9. Since then, the slide has exceeded 12 percent, or 2 percent more than a correction in the share price.

Analysts have raised concerns about new product demand for the iPhone 4S now that some of the Apple's wireless carriers have complained about the high upfront costs they have to pay; capacity constraints at chip designers including Qualcomm (Nasdaq: QCOM), the biggest designer of mobile chips, as well as new competition from vendors in the tablet market coming from rivals using Ultrabook and Ivy Bridge chips from Intel (Nasdaq: INTC), the No. 1 chipmaker.

Still, analysts expect the Cupertino, Calif., company to report net income surged 55 percent to $10 a share as revenue jumps 33 percent to $36.64 billion.

Apple's shares have had a nearly unprecedented runup this year, bursting past the $500 and $600 levels before the current correction. The problem has been faced in the past by high-flying technology companies including Microsoft (Nasdaq: MSFT), the world's biggest software company, and Cisco Systems (Nasdaq: CSCO), the No. 1 maker of Internet equipment.

Although not required to, Apple's reports have usually included breakdowns of shipments for its top products, the iPod, MacPro, iPhone, iPad and some information about iCloud downloads.

Analyst Peter Misek of Jefferies expects the company to report shipments of 4.7 million MacPros, 7.1 million iPods, 33.2 million iPhones and 12.4 million iPads - all down significantly from the last quarter, which included holiday gift-buying.

CEO Tim Cook, who was probably America's best-compensated CEO last year, when he was awarded a million Apple restricted stock units ties directly to the share price  -- valued now around $571 million - and CFO Peter Oppenheimer will also be asked questions about the future including:

• Apple's response to the antitrust suit filed by the U.S. Department of Justice alleging price-fixing for e-books. Apple has denied the charges and refused to settle with a fine, unlike other defendants, including News Corp.'s (NYSE: NWS) HarperCollins unit and CBS (Nasdaq: CBS)'s Simon & Schuster.
• Costs to remediate labor conditions at the China plants of Taiwan's Hon Hai Precision Industries, known as Foxconn, where the Fair Labor Association found some abusive practices, including excessive overtime. Apple has promised to remediate them but may have to lift some of its already high prices. Foxconn manufactures most Apple products.
• Shipping dates. They will be asked but probably won't tell shipping dates for any successor to the iPhone 4S, as well as the next version of the iPad, as well as Apple TV.
• Uses of the cash. Cook and Oppenheimer already announced Apple will reinstitute a dividend and share buyback in the company's fourth quarter, which starts in July. But it will be interesting to see how much in cash and investments the company has added since Dec. 31, when they reached a record $98.6 billion.

At Monday's values, Apple's market capitalization is $533.04 billion, placing it $124 billion ahead of No. 2, Exxon Mobil Corp. (NYSE: XOM).