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Investors are expecting a pleasant surprise when Apple (Nasdaq: AAPL) issues its Q4 earnings report on Monday, Oct. 19, and analysts expect Cupertino to close 2009 with a bang as well.
As a result, they're bullish on Cupertino. "We believe the stock is a must-own technology bellwether," said Brian Marshall, an analyst at Broadpoint AmTech. Apple should close out 2009 strongly, he expects.
However, Apple may stumble a little along the way -- its Snow Leopard operating system seems to have a bug, which may delay the adoption of Macs in the enterprise.
Great Expectations
"We expect GAAP (generally accepted accounting principles) results of (US)$9.725 billion in revenue, and earnings per share (EPS) of $1.66," Marshall said. He pegs December's figures at $11.565 billion in revenues and EPS at $1.98.
He estimated Apple's gross margins for the fourth quarter at 36.8 percent.
Although Marshall used GAAP figures although, a recent Financial Services Accounting Boards ruling will allow the company to use non-GAAP figures. However, "there's no consensus on non-GAAP figures yet," he told MacNewsWorld.
Apple, Cisco (Nasdaq: CSCO) and other companies had been campaigning to use non-GAAP figures for hardware/software combos like the iPhone, where customers pay a monthly fee over a set period, because it better reflects their earnings.
Apple's future now lies in penetrating the global market. Its installed basis in the United States is so large that it's difficult to chalk up good growth figures quarter over quarter, Marshall said.
However, investors should look beyond the straight growth figures, Marshall warned. For example, iPod sales 
declined year over year in June for the first time. However, there's more to the story than that -- the drop was offset by increased sales of more expensive products. "The good thing is, people are buying up instead of down," Marshall explained. "Instead of iPod shuffles, they're buying the iPod touch at a higher average sales price."
Marshall has set a price target of $210 for Apple shares.
Guidance Is for Wimps
At Monday's earnings call, Apple will, like other companies, offer guidance on earnings and revenues.
Investors should take Apple's figures with a grain of salt, Marshall suggested. "Based on historical guidance patterns, we would not be surprised to see December 2009 revenues guided to between $11.1 and $11.13 billion and EPS of $1.58 to $1.63," he said.
"It is well-known that Apple prefers to guide conservatively and recently has beaten its December revenue and EPS guidance by approximately seven percent and 48 percent, respectively," Marshall explained. He pegs Cupertino's December earnings at $11.565 billion and its EPS at $1.98.
Possible Sales Pick-Me-Ups
Several recent news items may indicate growth areas and opportunities for Apple. One is a Piper Jaffray survey of the teen market that indicates 22 percent of respondents plan to buy an iPhone within the next six months.
Another growth area could be computing, where Apple could double its share of the worldwide market in five years, Marshall said. Apple currently has four percent of the global personal computer market. "There's plenty of untapped room there," he explained.
Apple's recent split with the U.S. Chamber of Commerce over the issue of greenhouse gases may have more impact on sales of Apple products. In short, Apple quit the Chamber because that body was fighting a proposal to limit U.S. greenhouse gas emissions.
The move has scored points among some green proponents. "We're seeing more action from Apple on greenhouse gas disclosure," Greenpeace's Casey Harrell told MacNewsWorld. "Their leaving the Chamber appears to be another step in delineating their position on climate change."
This could cause consumers who are concerned about the environment to give Apple's wares a closer look. Apple committed to going green because of consumer pressure, according to the Sept. 30 edition of Greenpeace's online newsletter.
Bedeviled by Bugs
However, reports of flaws in Snow Leopard, the latest version of Apple's Mac OS X operating system, may trip Apple up, at least until a fix is pushed out.
One of Apple's new avenues for growth has been the enterprise market. Apple has enough of a presence in corporate America now that antivirus vendor McAfee on Tuesday announced endpoint protection products for the Mac.
That growth may develop a limp unless the flaws in Snow Leopard are addressed quickly. At the top of the list is a data-eating bug that wipes users' computers when they log in as guests. Others reported bugs include an inability to back up using Time Machine and an inability to access Microsoft (Nasdaq: MSFT) Active Directory for authentication.
These problems could lead enterprises to turn away from Macs, warned Charles King, principal analyst at Pund-IT.
A Better Tomorrow?
Analysts have been calling on Apple to add Verizon to its U.S. wireless carrier lineup, as this could help increase iPhone sales. Apple and Verizon should work out a deal by around mid-2010, Broadpoint Amtech's Marshall expects. "I think Apple has given enough jabs at AT&T (NYSE: T) the past few months that they show they realize Verizon will be a good alternative," he explained.
To make that happen, Apple will have to reduce the size of Verizon's subsidy for the iPhone, Marshall said.
This past week, AT&T agreed to allow VoIP application to use its 3G data network rather than limiting the technology to WiFi connections or work-arounds that force callers to use up their cellular calling plan minutes. While the move could be of use to iPhone users who travel, it won't be of much use to investors just now, said Julien Blin, CEO and principal analyst at JBB Research.
"We are not there yet in terms of quality of service for most wireless voice over IP apps like Skype Mobile, so I don't expect a lot of iPhone users to adopt Skype as their major voice solution," he explained. Still, it is a step toward the future and, with the pace of change picking up, it might become a sales draw sooner than expected.
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