The Apple (Nasdaq: AAPL) Stock Earnings Paradox: Only Bad News Matters

Apple's long streak of outstanding earnings distorted Wall Street's expectations to the point where only a huge beat is enough to move Apple stock up significantly. But even a minor disappointment will result in a major pullback, particularly in the generally weak market we've seen since the start of the New Year.

Analysts are looking for a strong quarter from Apple, the first of the company 2014 fiscal year and historically its most lucrative because of heavy holiday sales.

The quarter is also an important barometer for how Apple will fare for the rest of the year, as it hints at how the tech giant's new offerings, introduced over the course of the fall, are likely to sell through subsequent quarters.

Here's what to expect from Apple earnings:

The consensus numbers on AAPL are for earnings per share of $14.35 on revenue of $58 billion. Both would be new all-time highs and would represent growth of 6.6% on the top line and 4% on the bottom line.

As usual, most investor attention will be focused on iPhone sales, as that iconic product accounts for about half of Apple's earnings. This quarter will tell us how the iPhone 5C is doing, the slightly cheaper and less capable brother to the iPhone 5S.

Most reports have indicated the 5S is much more popular, which will help boost Apple's margins, something that tends to please analysts. Expectations are for a gross margin of 37.5%.

Actual iPhone unit sales are expected to be 56 to 57 million, about 10 million more than the year-ago quarter. And that's without the deal with China Mobile, which did not go into effect until after the quarter ended but will open up the iPhone to 700 million new customers.

Analysts are looking for 24 to 25 million iPad units, a slight increase over last year's 22.86 million.

With regard to the iPhone and iPad, analysts will likely grill Apple over the declining market share of those products in its competition with smartphones and tablets running Google Inc.'s (Nasdaq: GOOG) Android software.

And Mac sales should be about 4.6 million, which would represent a healthy 13.3% gain in a slumping PC market.

So far Apple has been polite with Icahn and has bought back at least 47 million shares over the past year (which has improved its earnings per share, by the way), and that has helped buoy the Apple stock price, currently trading at about $550. But the company may not be willing to do much more.

One thing you won't hear about in Apple's earnings call is plans for new products, such as the long-rumored iWatch or Apple television. Chief Executive Officer Tim Cook will say that Apple has exciting products in the pipeline, but won't get any more specific.

But one of those new products - or both, or something else - is what the company needs to push Apple stock back to its previous all-time high just north of $700 and beyond.

The deal with China Mobile certainly helps, but there simply isn't enough growth left in the smartphone and tablet markets to move Apple stock in a big way. The company needs a new product category to create a fresh conduit of profits in order to again start chasing that elusive $1,000 price target.

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