Expectations high for Apple's results

By Gabriel Madway

SAN FRANCISCO (Reuters) - Expectations are high for Apple's (AAPL.O) quarterly results on Tuesday, in the wake of strong early sales for its new iPhone and improved sentiment on the personal computer market after Intel Corp's (INTC.O) earnings.

Apple launched its third-generation iPhone 3GS in mid-June, and also slashed the price of the previous model to $99 (59.92 pounds), which should contribute to healthy overall sales.

Analysts say relatively strong consumer demand for computers and lower prices on refreshed Mac laptops may also help revenue, although there is some concern about margin pressure, given recent trends in component costs.

"I think the key is that core consumer demand is there," said Hudson Square Research analyst Daniel Ernst, while noting some weakness in education, one of the company's key markets.

"There are lines for $400 phones. Clearly they're well positioned, and when the PC market comes back, we believe they're going to take significant share."

Apple's results could further bolster its stock, which has been among the top performers in technology in 2009. The shares have risen 6 percent since Intel beat expectations last week, and are up more than 70 percent this year. They trade at more than 26 times forward earnings.

Wall Street is expecting Apple to post earnings of $1.16 a share on revenue of $8.2 billion in the June quarter, according to Reuters Estimates. That would be an earnings dip of about 2 percent and a revenue increase of 10 percent from a year ago.

Analysts say the "whisper number" is likely in the low $1.20s per share for the fiscal third quarter, and note that Apple has a history of topping expectations.