Apple May Need to Power Up Mac

Apple's (AAPL Quote) iPod may be grabbing all the attention these days, but its Macintosh computers are still the key to the company's continued success, some analysts say.

Sales of iPod digital music players have revived Apple's business over the last two years. But the lion's share of the company's revenue and profit still comes from computer sales.

For the company to maintain momentum -- and its sky-high stock price -- the Mac computer line needs to catch some of the iPod's fire, analysts say.

"What happens down the line, that's the worry with Apple," says Jay Somaney, a portfolio manager with TSG Capital Group, who is net neutral on the stock, being long the shares and put options. Computer sales "could be the wild card, and that's what I'm watching for," he says.

Somaney and other Apple watchers should get some insights into the company's business Wednesday afternoon, when it reports second-quarter earnings. Many on the Street have high expectations for the company's just-completed second quarter.

Analysts polled by Thomson First Call are expecting a profit of 24 cents a share on $3.18 billion in sales. That's far ahead of Apple's own outlook; in January, Apple predicted it would earn 20 cents a share in its just-completed quarter, on $2.9 billion in sales.

Assuming the company hits even the lower target, it would mark a considerable improvement from the year-ago period, when Apple earned $46 million, or about 6 cents a share, on $1.9 billion in sales.

Apple has yet to provide an outlook for the rest of its fiscal year, but the Street is expecting the company to keep on clicking. In the third quarter, analysts are predicting a profit of 24 cents a share on $3.21 billion in sales. For the full year, they are looking for $1.11 in per-share earnings on sales of $13.34 billion.