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BOSTON (TheStreet) -- Apple's (AAPL) quarterly earnings results, to be released today after the stock market closes, are being overshadowed by concern over CEO Steve Jobs' health. Fund managers say investors should instead focus on the growth of popular products including the iPad and iPhone.


Steve Jobs announced another health-related leave of absence

yesterday, Apple shares fell as much as 6.4% from an all-time high of $348.48.

Apple CEO Steve Jobs

The news was oddly timed, as the announcement came a day before Apple releases its fiscal first-quarter financial report when the stock market was closed to observe Martin Luther King Jr. Day. Even so, fund managers such as Channing Smith, who manages the

Capital Advisors Growth Fund


from Tulsa, Okla., say investors need to cut through the noise.

"Looking at the circus -- and that's probably a good way to describe it -- the perception has been rightly or wrongly that Steve Jobs is Apple," Smith says. "This issue with the unexpected health development is going to create long-term uncertainty, but in the short term Apple's product lineup will remain best in class."

Herb Chen, manager of the

Huntington Growth Fund


in Columbus, Ohio, expects Apple's shares to recoup their losses. "Earnings will beat expectations," he says. "Apple typically sets low earnings expectations, and hence, beats the Street."

For the company's first quarter of fiscal 2011, analysts expect Apple to report earnings of $5.40 a share and revenue of $24.4 billion, according to a poll by Thomson Reuters. That would be a sharp increase from a year earlier, when Apple posted a profit of $3.67 a share on sales of $15.7 billion.

But it isn't all about earnings and revenue numbers for Capital Advisors Growth Fund's Smith, as the sales performance of Apple's devices will tell the real story, he says. Capital Advisors Growth Fund has 3.1% of its $23.5 million in net assets allocated to Apple.

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"We're expecting another enormous upside quarter when they report, especially with the iPad," Smith says. "What's key is that, in this critical holiday season quarter, Apple had two enormous distribution channels open up at






. I think the Street will likely have underestimated the growth in the iPad."

That would be an about-face from the previous quarter, when Apple sold 4.2 million iPads. That was below Wall Street's target of 4.8 million. The disappointing iPad sales figure drove Apple shares down 6% in the trading session following the fiscal fourth-quarter earnings release. For this quarter, Smith expects Apple will say that more than 7 million units shipped.

Like Smith, Huntington's Chen expects strong iPad sales results this time around, and he expects outperformance in the company's other product categories.

"The iPhone is in a competitive landscape, but its

agreement with Verizon

should help in its popularity," Chen says. "And computer sales should continue to grow, too. It will be interesting to see how much Apple beats the earnings number."

As Apple represents a 6.5%, or $8.7 million, position in the Huntington Growth Fund, Chen says he'll be watching Apple's earnings report very closely. As a growth-fund manager, Chen says he will be looking at the numbers to see if Apple's growth is keeping up with the price-to-earnings multiple.

"The consensus view of long-term growth of Apple is 16.2%," Chen says. "I will be looking for a confirmation of such growth. The P/E multiple is 16.7 times, which is very reasonable."

Apple's earnings release comes at a time when critics argue that shares trade at an inflated price-to-earnings ratio of 22.






, by comparison, have P/E ratios of 12.

Capital Advisors' Smith says that, if you back out Apple's cash position of roughly $55 a share, the stock doesn't look expensive assuming the company earns $20 a share in profit.

"Here's a company that is going to grow at least 25%. You have to ask what that is worth," Smith says. "If you take out the cash and you look at earnings and revenue growth and the free cash flow, it's definitely not expensive in my opinion."

Smith cautions investors not to get too caught up in Apple's guidance for the fiscal second quarter. Apple has developed a reputation on Wall Street for offering a tepid outlook.

"Guidance has probably always been soft, and I think they'll continue to do that," Smith says. "The trend in mobile Internet, which we're keying in on, continues unabated. The growth in mobile Internet devices in enormous. Apple is a key player in that explosion and they're a technology leader. They'll continue to perform exceptionally well."

-- Written by Robert Holmes in Boston


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