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Monday, January 21, 2013, 06:00 am PT (09:00 am ET)

Apple Q1 2013 earnings preview: The pressure is on

Apple this Wednesday is expected to report record iPhone and iPad sales from the 2012 holiday season. But as investors are uncertain about the company's future, all eyes will be on CEO Tim Cook to ease those concerns.

Earnings


This Wednesday's earnings conference call has already been declared Apple's most important in a decade. The report arrives as AAPL stock has taken a significant hit in recent months, dipping below the $500 threshold.

The timing of Apple's selloff is particularly interesting, as the company just completed a holiday quarter that was likely the strongest in its history. Consensus calls for Apple to report $54.58 billion in revenue, which would be up from its previous record of $46.33 billion set in the holiday 2011 period.

But Apple's breakneck pace of growth has also shown signs of slowing. And new, cheaper products like the iPad mini have caused concern among investors that the company's gross margins will slip.

Rumors in recent weeks have also piled on the bad news for Apple, with claims that the company is cutting component orders for both its full-size 9.7-inch iPad as well as the new iPhone 5.

Investors hope that Cook will take the opportunity this week to address those recent rumors about waning demand for his company's products. Legally, Apple is unable to comment before Wednesday's earnings.

Earnings


Particular attention will also be paid to Apple's guidance for the March quarter. Any potential decreases in demand are expected to be seen in the company's second quarter of fiscal 2013, which is currently underway.

For the December quarter, investors have high hopes, with consensus calling for sales of 50 million iPhones and 23 million iPads. Those numbers would be up from sales of 37 million iPhones and 15 million iPads in the year-ago quarter.

But market watchers also expect Apple to sell 5 million Macs, down from 5.2 million a year ago. It's believed that production constraints with the new iMacs, particularly the 27-inch model, held back sales during the holiday shopping season.

iPod sales are also expected to fall from 15.4 million in the holiday 2011 season to 12 million at the end of 2012.

Margins for the first quarter of fiscal 2013 are expected to slide to 39.5 percent, affected by a major revamp of the company's nearly entire product lineup at the end of calendar 2012.

As for the March quarter, Wall Street consensus sees the company earning $46.9 billion in revenue with gross margins improving to 41.5 percent as production of new products improves.

Market watchers expect the company will sell 37.5 million iPhones, 18 million iPads, 4.2 million Macs, and 6 million iPods.

Earnings

Apple CEO Tim Cook and CFO Peter Oppenheimer.


What's not expected from Cook and other Apple executives this week are comments on rumors that the company plans to expand the iPhone lineup this year in an effort to ward off less expensive handsets running Google's Android platform. Some rumors have claimed Apple will launch a low-cost iPhone this year designed to be sold contract-free in emerging markets such as China.

However, Apple is a notoriously secretive company that does not talk about its future product pipeline. Questions about rumors and future products asked by analysts during the company's earnings calls are routinely shot down by Cook and Apple CFO Peter Oppenheimer.

Apple will report earnings for the first quarter of fiscal 2013 this Wednesday after the market closes. The company will follow up with a conference call with analysts and the media at 5 p.m. Eastern, 2 p.m. Pacific. AppleInsider will have full, live coverage of the event.