Apple's Tablet Will Be an iFlop
Apple ( AAPL) chief Steve Jobs is back, iPhones are flying out the door -- it's almost enough to stop one from worrying about Mac sales being down 11% from last year. Tech investors will turn their attention to Apple after the bell today to see how well the new iPhone and its $99 cohort helped the gadget shop sidestep the slowdown in computer sales. The strong debut of the new iPhone 3G S illustrates Apple at its best. Creativity, anticipation, risk and a deft hand at delivering popular device designs gave Apple an iPhone product cycle that's defied the recession and countered the waning popularity of the company's other products. The big worry is whether Apple can sustain the iPhone magic beyond the most recent quarter as new smartphones from Research In Motion ( RIMM), Motorola ( MOT) and Palm ( PALM) enter the picture.
About 5.3 million iPhones were sold in Apple's fiscal third quarter ended last month, estimates RBC analyst Mike Abramsky. That's a 40% increase over the prior quarter. And looking ahead to the September quarter, that iPhone momentum could fade, bringing other areas into focus.
The Mac swoon will eat into profits, say Sanford Bernstein analysts, as Apple cuts prices on notebooks and pushes its back-to-school promotions. Apple, more than peers like RIM or Hewlett-Packard ( HPQ) and Dell ( DELL), relies heavily on consumer spending, and there's little evidence that people are feeling more confident about their finances. Analysts are expecting Apple to post earnings of $1.16 a share, down from the $1.19 level in the year-ago quarter. Sales are expected to be $8.2 billion, which is up about 9% from the $7.5 billion Apple booked a year ago.