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Apple's Future Looks Bright

Investors are looking for reassurance on an expected second-half bonanza.

With its iPhone scheduled for release toward the end of June and the Leopard operating system

pushed out until October,


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fiscal second-quarter

earnings report on Wednesday could be relatively quiet.

But it will be the lull before another consumer-assault storm.

Apple's most talked-about release in the last three months has been Apple TV, a wireless box that can stream movies, TV shows and music from a computer to a television.

Apple TV was released in February -- too late to have much of an impact on the second quarter.

However, Apple also announced earlier this month that it has now sold 100 million iPods, leading analysts to believe that iPod sales could be better than expected and boost second-quarter results.

"I think they will report a slight upside to the consensus revenue and EPS," says Romeo Dator, co-manager of the U.S. Global Investors All American Equity Fund, which has Apple among its top 10 holdings.

Dator expects a "slight beat" to expectations of iPod sales of 10.7 million, while Mac sales are likely to be in line with the consensus of 1.45 million sold.

For the quarter, the analysts polled by Thomson First Call estimate a profit of 64 cents a share and revenue of $5.17 billion.

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Apple could also post a better-than-expected

gross margin, says Tony Ursillo, an analyst with Loomis Sayles, which holds Apple shares. Margins could come in a little higher than 30%, above Apple's guidance of 29.5%. Ursillo expects the top line to mirror the consensus estimate, although the company could add a little extra to the bottom line. "It's a tougher period seasonally," he says.

Shares of Apple closed Tuesday off 27 cents to $93.60 as the company's former chief financial officer

blamed CEO Steve Jobs for his role in a backdated stock option grant. But investors appear to believe Jobs is safe; the stock has been up about 11% this year.

But it's word about the company's highly anticipated second half of the year that will capture investors' attention during the company's earnings report, say company watchers.

Any favorable guidance on the iPhone and Leopard is likely to drive the stock, says Dator, but Apple will likely follow form and underplay its estimates.

Analysts are expecting Apple to post a profit of 67 cents a share on revenue growth of almost 25% to $5.44 billion in the third quarter.

"The wild card around guidance is how Apple views the impact of the Leopard delay on sales of its Macs," says Ursillo. "It will be interesting to see if they say it may not make much of a difference or if they will be more conservative, in which case the stock might sell some."

But it's in the company's fourth quarter ending Sept. 30 -- and its holiday-related first quarter -- that investors are likely to get really excited, says Dator.

"The September quarter will be the first full quarter with the iPhone on sale, and that could be a very big number, and December will be almost a full quarter with the Leopard operating system being on sale -- and that could help boost Christmas sales," he says.

Until then, the company may be able to satisfy investors by keeping the iPod juggernaut going while beating its own conservative expectations.