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Ahead of the bell: Apple’s Q3 a critical sign for the state of the tech industry

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Ahead of the bell: Apple’s Q3 a critical sign for the state of the tech industry

Chicago (IL) – It’s earnings announcement season again, as it is four times every year, and we are waiting for key companies to announce revenues, profits, margins, inventories and expectations for the third and fourth quarter this year. All eyes are on Apple, which will report its CQ2 results later today. The expectation includes record sales and a positive sign for the entire tech industry to offer hope for a rebound of the economy. Apple better delivers.

Rarely have we seen a similar frenzy over an upcoming earnings call. Analysts and media (that would include us at TG Daily) seem to not be able to sit still anymore until that revealing press release, due at 4:15 pm EDT today, will cross the newswires. Record sales are expected across the board, despite the questionable state of the economy, and investors have sent Apple’s stock 20% up since the company’s FQ2 (CQ1) conference call.

The analyst consensus estimate is that the company will report revenue of about $8.16 billion, up from $7.4 billion last year. Profits are expected to show a slight dip. Apple predicted a revenue range of about $7.7 billion to $7.9 billion for the period.

Once again, all eyes are on the iPhone and it seems that both the $99 iPhone 3G as well as the new iPhone 3GS are believed to have been the growth drivers. Analysts have put the unit number at a total of about 5.3 million iPhones during the quarter, which would be a 40% increase over the same period last year. iPod sales are generally expected to be down for the year (from more than 11 million to 9.6 million), while Mac sales are estimated to be up by about 5% to 2.6 million units.
   
For the first time, we would also expect Apple’s AppStore to be highlighted and show a significant impact on Apple’ sales. 500 million paid and free applications are estimated to have been downloaded during the quarter and it will be interesting to see how much money Apple can make of the store.

We note that expectations for the earnings call are unusually high, even for Apple, and the company needs to deliver in order to keep its current stock price and analysts happy. It is as simple as that.

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