Apple Earnings; Cisco's Cuts

NEW YORK (TheStreet) -- Apple(AAPL) shares rose 1.3% to $378.80 in pre-market trading on Tuesday, as the company prepares to issue its third quarter earnings after the ball. Analysts are expecting a good quarter from the consumer tech giant, which is expected to post earnings of $5.83 a share, up from $3.51 during the same period last year.

Cisco(CSCO) shares rose 0.4% in pre-market trading on Tuesday after the network equipment maker said it was cutting 11,500 employees, or 16% of its workforce through job cuts, buyouts and outsourcing.

The cuts are part of a $1 billion cost reduction effort to help Cisco realign its business, deal with a drop in tech spending and face market share losses that have battered the company's stock this past year.

IBM(IBM) shares popped 2% in pre-market trading on Tuesday after the software giant posting strong quarterly earnings.

Big Blue brought in revenue of $26.7 billion, compared to $23.7 billion in the same period last year; the numbers were above analysts' estimate of $25.35 billion. Excluding items, IBM earned $3.09 cents a share, up from $2.62 cents a share in the prior year's quarter and up from analysts' forecast of $3.03 a share.

Shares of Baidu(BIDU) jumped 1.4% to $150.25 in pre-market trading on Tuesday after the Chinese search engine reached a deal with major record labels to provide licensed music for users to stream or download for free.

The deal ends years of legal struggles between music labels like Sony(SNE), Universal Music Group and Warner Music Group and Baidu over the use of the search engine's MP3 service which has been accused of promoting piracy.

Online privacy start-up Reputation.com raised $41 million in venture funding, the company said on Monday. The round brings the company's total funding to more than $65 million. Reputation.com helps consumers manage their privacy and reputation online.

--Written by Olivia Oran in New York.

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No Slowdown at Apple Expected in Fiscal Q3

Story corrected to reflect Apple will report fiscal third-quarter earnings, not second-quarter results.

BOSTON (TheStreet Ratings) -- Apple(AAPL) is scheduled to report fiscal third-quarter earnings after the market close on July 19, and the company's report is expected to show its red-hot growth in sales and earnings continued in the quarter.

Analysts are expecting the computer and personal device maker to report earnings per share of $5.73, up from $3.51 reported a year earlier. Revenue is estimated to increase 58% to $24.8 billion from $15.7 billion based on expectations for improving iPad and iPhone sales.

The following is taken from a first-quarter report published by TheStreet Ratings, an independent-research unit of TheStreet that uses a quantitative model to evaluate stocks.

Apple reported significant earnings per share improvement in the first quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Apple increased its bottom line by earning $15.15 versus $9.07 in the prior year. This year, the market expects an improvement in earnings ($24.92 versus $15.15).

We rate Apple a "buy." This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. Our model maintains a price target of $470 on shares of Apple, indicating the potential for 31% upside from current levels.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Computers & Peripherals industry and the overall market, Apple's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

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Apple Shakes Off Growth Fears, But What's Next?

BOSTON (TheStreet) -- Apple(AAPL) shares notched yet another all-time high on Monday even as the Dow Jones Industrial Average tumbled nearly 100 points, an impressive comeback for a stock that suffered its worst first-half performance in three years.

Apple, which is due to report quarterly results after the closing bell today, lost some of its shine earlier this year on worries the company could sustain its high growth rate. Apple didn't hold to its schedule of launching a new iPhone iteration in June. Competition from Google(GOOG) and other handset and tablet makers intensified. Perhaps most importantly, Apple CEO Steve Jobs took yet another leave of absence for health reasons.

By June 20, Apple shares hit a low of $310.50, 3.7% below the stock's closing price at the end of 2010. Through the first six months of the year, Apple shares had their worst first-half performance since 2008, when the worst recession since the Great Depression bruised equities. Since that trough, Apple's stock has roared back, breaking through $374 to a new record high. Apple added $8 billion to its market cap during Monday's session alone.

"The 'Steve Jobs' factor was what hurt the stock in the first six months of the year," says Bryan Keane, co-portfolio manager of the Alpine Global Consumer Growth Fund(AWCGX). "But there's also a lot of talk now about what's next. At this point, it's not completely clear in terms of a product perspective. Investors are in limbo in terms of future growth rates for Apple going forward."

Keane, who helped launch the Alpine Global Consumer Growth Fund earlier this year and is a holder of Apple, says it's unclear what the next major product offering will be from Apple. The iPad 2 launched in March to much fanfare and the next iteration of the wildly popular iPhone is expected to debut in September. While Mac computer sales have been robust, Keane questions what Apple could have up its sleeve next.

"The iCloud was anticipated and it's up in the air if it will have the same impact the iPhone and iPad had," Keane says, referring to the cloud computing service Apple unveiled last month. "They're secretive about what their new products are, so it's difficult to determine the future growth rate." Apple boasted a sales growth rate of 52% in fiscal 2010, with net income jumping 70%.

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How Apple Products Will Sell

CUPERTINO, Calif. (TheStreet) -- As Apple(AAPL) reports fiscal third-quarter results Tuesday afternoon, will investors see some of the magic that hit Google(GOOG) in its second-quarter report last week?

"All in all, I would expect a good quarter, not a Google-type of quarter, but a good quarter," said Michael Yoshikami, CEO and founder YCMNET Advisors, which holds a small position in Apple. "I am expecting good numbers -- I think that they will surprise to the upside with iPad numbers."

Analysts predict that Apple will enjoy a summer of major iPad and iPhone sales, despite the lack of a new iPhone announcement at its Worldwide Developers' Conference (WWDC) last month. An upgraded version of the device is expected to make its debut in September.

YCMNET's Yoshikami is not getting too carried away with all the iPhone chatter. "I won't be surprised to see the iPhone numbers be fair, but not great," he told TheStreet. "That would be because Verizon(VZ) has had a very successful rollout of their LG LTE devices," said Yoshikami, referring to the slew of Google Android phones hitting the market this summer.

The Apple investor expects to see Mac adoption rates continue to rise, as well as hear more details about its recent patent win against HTC.

"I will be listening for what they are going to do about Apple in terms of litigation, and also their TV product launch," he said, referring to rumors that the company is planning to enter the high-definition TV market, possibly later this year.

Apple, of course, is notoriously tight-lipped about future product launches, and analysts seem to think that the firm is likely to focus attention on the roll-out of its new iCloud service, which was unveiled at WWDC last month.

Overall, analysts surveyed by Thomson Reuters are looking for Apple to report third-quarter revenue of $24.92 billion and earnings of $5.80 a share.

--Written by James Rogers in New York.

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Apple vs. Google: A 5-Round Scorecard

NEW YORK (TheStreet) -- Summer has been good for Apple(AAPL) shares, but it's been even better for Google's(GOOG).

The fierce mobile tech rivals have enjoyed a resurgent popularity among investors over the past month, with Apple up 14% and Google -- thanks to a strong second-quarter performance -- up 24%.

Investors will watch to see if Apple can top Google's results when it releases its fiscal third-quarter report after the bell Tuesday. (TheStreet will live-blog Apple's earnings day, starting at 3:45 ET.)

But beyond the financial metrics, Apple and Google continue to duke it out on the innovation front. Apple and Google are undeniably the sector leaders, but they also represent a large swath of the tech market being shaped by sweeping trends in technology.

Developing areas like social networking, mobile, devices, cloud services and retail expansion are just some of the forces fueling investor enthusiasm.

Here is an updated look at how well some analysts and industry experts say Apple and Google measure up in five of the key categories. The half-dozen analysts TheStreet spoke with were asked to rank the companies' performance on a 1-5 scale.

Social Web

Three months ago, this category had both Google and Apple tied in a dead heat for Social Networking Failure. But in just the past two weeks, Google's new Facebook imitation Google+ has managed to catch on with 10 million-plus users.

For its part, Apple has Ping, a community-building attempt that allows users to share their music recommendations and comments with others in iTunes. The uptake has been disappointing. And FaceTime, a video conferencing service linking Apple devices only, has had limited success.

Social is a much bigger threat to Google's search ad-driven business and therefore a much larger priority for the `Net giant. Google+ is a promising medium for Google to plant ads that are targeted to people aligned around common interests. It's still early, but Google+ could help Google forestall Facebook's advertising challenge.

"Apple just hasn't gotten into this area yet and relies mostly on third-party products," said Gartner analyst Ken Dulaney. "Google participates, but its early days and they have had some failures already."

Score: Apple 2, Google 4

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