Macworld Means Little If Apple (AAPL) Earnings Are Light

Apple’s (AAPL) big annual product show, Macworld, is beginning. Usually Steve Jobs announces some important new set of products. MarketWatch writes that Jobs may introduce a "small, ultra-portable version of the MacBook laptop computer." The company could also announce that its computers will be WiMax and 3G compatible.

Apple could say that it will add 3G capacity to it iPhone. The device suffers because it runs on AT&T’s (T) slower 2.5G network now.

None of this will matter much if the calendar fourth quarter was not an absolute blockbuster for Apple. It could even make topline and net income forecasts but if sales of a key product are poor, the market will destroy the stock.

While estimates vary a bit, Wall St. expects that Apple sold 2.4 million Macs in the last quarter of 2007. That is almost 50% better than last year. There is some evidence that consumer spending pulled back sharply in the second half of December. If the Mac got caught in that downturn, the numbers could be light.

RBC Capital has already revised down its estimates for iPod sales, from 25.3 million to 24.4 million. Consumer spending could hurt iPod sales but so could market saturation. At some point everyone who wants an iPod will have one. It is just a question of when that day will come.

From a psychology standpoint, sales of the iPhone maybe more important than those of Apple’s two older products. The iPhone is viewed as the company’s future. Bear Stearns recently published a research report voicing concern about whether the iPhone was selling up to expectations. The Chinese market, which was important to longer term projections for the handset seems closed now that China Mobile (CHL) has rejected a deal.

Apple’s stock almost always rises at Macworld time. The "crazies" who love the companies products and shares just can’t help themselves. But the company needs to support a 80% plus increase in its share price over the last year. Announcement of a new gadget won’t do that.

Douglas A. McIntyre