A Bear Outlook for Apple? Analysts Are Cautious on Sales Growth

Apple's (AAPL) shares are trading at about $347, just shy of their all-time high of $364.90, which they hit in February. Its second quarter earnings were extraordinary, with record-high revenue of $24.67 billion and record net profits of $5.99 billion, or $6.40 per diluted share. Compare those results to those of second quarter 2010, when the company recorded revenue of $13.50 billion and a net quarterly profit of $3.07 billion, or $3.33 per diluted share. Given those numbers, it's hard to picture why some are expecting the stock to dip.

But analysts who cover Apple have started to become more cautious about the firm's future. Among 44 analysts who cover Apple, the low estimate for current quarter EPS is only $5.03. That would still be up from $3.51 last year, which would mean an increase of 43%. That seems impressive, but by Apple's standards, it is not. The low estimate for revenue in the current quarter is $23 billion. That would be up 46%. Again, the figure is amazing for a company of Apple's size, but not extraordinary by Apple's standards.

So what are the chinks in Apple's armor? The first is the iPod. The product that became the foundation of Apple's renaissance is now 10 years old. Sales of iPods dropped 17% in the last reported quarter compared to the same period last year. The iPod is hardly Apple's most important product from a revenue standpoint, but a decline in its sales will have to be made up for elsewhere in Apple's product line. The fall off is also an reminder that even Apple's hip devices can get old, and their sales can falter.

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Second, Google's (GOOG) Android operating system continues to be described as a threat to the sales of iPhones and iPads. It is impossible to prove the degree to which this is the case. Android's presence is spread among a number of manufacturers which include Motorola (MMI) and HTC, and the Android app store is still smaller than Apple's. Apps are considered a critical tool for tethering users to the hardware that they own. Apple's long-term problem is that the number of Android apps available could eventually surpass the number of those offered in its App Store, which could dim the popularity of iPhones and iPads, even if the effect is modest. Android is no longer just a fast-growing operating system -- it's an actual challenger to Apple's smartphone dominance. That point has been made often, but the growth in the number of Android apps makes it worth repeating.

On the positive side of the ledger, Apple has just released a new line of more-powerful Macs with quad-core processors. The company claims that "the new iMac is up to 70 percent faster and new graphics deliver up to three times the performance of the previous generation." iPhone sales are still raising rapidly. And, in the first quarter of 2011, Apple took the No. 2 spot in global smartphone sales, according to research firm IDC.

Those who are bearish on Apple argue that a large company's sales can only increase at a double-digit rate for so long, but with Apple, that point has yet to be proved. Nonetheless, the tech giant could see its sales-growth arc shift dramatically in the next few months: If that happens, Apple's $347 share price may start looking very high.

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