Apple Inc. (NASDAQ: AAPL) is set to report earnings after the close of trading today.  Today we’ll find out if there is a traditional ‘sell the news’ mentality that prevails or if this is going to be yet one more ‘off to the races’ report.  Apple’s Thomson Reuters estimates were $2.43 EPS going into the weekend and our freshest look comes to $2.45 EPS from the firm.  Revenue is expected to be $12.04 billion.

We are not going to be merely in the preview business because there are many metrics to consider outside of the headline data.  We have many individual analyst targets, options and chart data, trading ranges and more.

The first big caution here is that targets have greatly exceeded what the company set for a goal in its last quarter forecast.  Hence, Apple’s history of low forecasts and higher numbers.  On January 25, 2010, Apple guided revenue in the range of about $11.0 billion to $11.4 billion and diluted earnings per share in the range of about $2.06 to $2.18.   For the quarter ahead, Apple’s consensus is $2.70 EPS on $12.96 billion in revenues.  Will Apple take the conservative stance again with an “under-promise and over-deliver” stance?  We’ll know after 4:00.

Apple has risen from $210 at the start of the year to over $250 last Friday morning; and that is after trading under $200 for some time in early 2010.  So the stock is up close to 19% this year and up over 25% from lows to highs in 2010 alone.  The 52-week trading range is even more extreme at $118.60 to $251.14, and the lows in early March-2009 at the height of the selling panic were not just under $100 per share… it went under $90 at the peak of the panic selling.  Its longer-term moving averages are so far under today’s prices that they hardly matter: $221.88 for the 50-day moving average and $194.36 for the 200-day moving average.

Analysts have continued to raise targets.  The consensus mean estimate is now over $276 and the media target is even higher than that.  The first thing we would caution is that the iPad launch was effectively not in the last quarter, so those sales will work their way into guidance for the coming quarter.  As a reminder, any of these estimates may have changed going into today.  We have compiled some estimates in the last two days as follows:

• Rodman & Renshaw $2.65 EPS on $12.5 billion
• Bernstein Research $2.59 EPS on $12.6 billion
• Credit Suisse $2.57 EPS on $12.26 billion
• BOFA/ML $2.55 EPS on $12.2 billion
• Oppenheimer $2.54 EPS on $12.41 billion
• J.P. Morgan $2.53 EPS on $12.32 billion
• RBC Capital $2.53 EPS on $12.6 billion
• Deutsche Bank $2.50 EPS on $12.39 billion
• Piper Jaffray $2.45 EPS on $12.15 billion
• Broadpoint AmTech $2.41 EPS on $11.83 billion
• Thomas Weisel $2.39 EPS on $11.76 billion
• Citigroup $2.39 EPS on $11.4 billion

A figure from WhisperNumber.com given to us over the weekend was $2.45 EPS, although we have been told by others (and would expect) that the EPS figure will be far higher on a normalized basis.  Be advised, last quarter was very confusing for traders and investors due to the accounting changes.

The options trading has an interesting situation here. A spread bet right now or even a synthetic straddle  is just too expensive to play.  I noted yesterday when shares were not stuck in the middle of two strike prices that there was almost $19 premium to collect for those willing to write the near-month volatility trade.  On a static basis without taking any prior day’s market-maker order books into consideration, options traders appear to be braced for a move of just over $10 in either direction.  We would also note that speculators are taking extremes to get exposure on the cheap by buying near-month (May) CALLS up to the $300 strike and PUTS down to the $200 strike.

Again, the iPad was not in this last quarter’s operating revenues even though some of the expenses may have been recorded in the period.  As far as our checks around, we are looking for 7 million iPhones sold and Mac computer sales should be just under 2.7 million units.  iPod (and iTouch unit) sales are expected to be the drag here with sales of maybe even under 9 million units.

Stay tuned.

JON C. OGG

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