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Monday, October 19, 2009, 05:05 am PT (08:05 am ET)

Earnings preview: Wall Street expects Apple to impress

Expectations are high for Apple, set to report its fourth-quarter results Monday afternoon, as analysts believe the Mac maker will once again beat projections and defy the recession.

Analysts polled by Thomson Reuters Financial expect the hardware maker to report earnings of $1.42 per share, a 13 percent increase from the year-ago quarter and well above Apple's own projection of $1.18 to $1.23, according to The Wall Street Journal. Last year, Apple saw its fourth quarter profit rise 26 percent to $1.14 billion, or $1.126 per diluted share.

Apple is scheduled to report its earnings Monday at 2 p.m. pacific, 5 p.m. eastern.

During the last quarter, Apple unveiled new iPods at a September media event, including an iPod nano with video camera. But many analysts believe that market will continue to shrink, as consumers gravitate toward media-playing phones over standalone MP3 players. Analyst Mike Abramsky has predicted sales of 9.9 million iPods for the quarter, down 10 percent year over year, though the iPod touch is expected to be a strong seller based on access to the App Store.

Based on margins and explosive growth, the real driver of AAPL stock is the iPhone. Piper Jaffray analyst Gene Munster believes the company will have sold 7.5 million handsets during the September quarter. He, along with most others on Wall Street, expects the company's stock price to go well above $200 in the next 12 months.

With expectations so high, some have cautioned that Apple could disappoint with its earnings. Analyst Yair Reiner with Oppenheimer said in a note to investors last week that supply constraints of the iPhone 3GS due to high demand could lead to fewer handset sales than are expected. He views December as a "catch-up quarter," when Apple could easily sell more than 8 million iPhones.

Mac sales are predicted to be at a record setting pace, with analysts forecasting around 2.8 million in sales for the fourth quarter. If accurate, that would be the company's best-ever frame, topping a year ago when it sold 2.6 million Macs during the September 2008 quarter. Those sales, along with 6.5 million iPhones, helped the company's profits rise 26 percent year-over-year.

Looking ahead, analysts already expect December earnings of $1.91 per share, according to Thomson Reuters. They also expect Apple, which traditionally gives very conservative guidance, to forecast $1.68 per share.