NEW YORK (CNN/Money) -
Apple is expected to turn in strong numbers when the company reports earnings Tuesday, but with a twist -- for once, it may not be all about the iPod.
The expectation on Wall Street is that Apple (down $0.23 to $51.07, Research) will record yet another blowout quarter, with sales of the perennially popular iPod expected to be a big part of the story. Industry analysts surveyed by Thomson First Call are forecasting earnings of 37 cents a share, on average, for the latest quarter based on revenues of $3.7 billion.
That would be up from earnings of 27 cents a share and revenues of about $2.35 billion a year earlier -- at the time, Apple's highest fourth-quarter revenue in nine years, according to the company.
But analysts also agree that Apple enjoyed high shipments of its personal computers for the quarter, benefiting from promotions tied to the back-to-school season.
Another area to watch is gross margins, a key measure of profitability.
"They will be facing head winds of (component) pricing going up, but they've done a good job of managing margins last several quarters," said Shannon Cross, an analyst with research firm Cross Research/Soleil Securities, referring to rising prices in chips and other components.
What goes up must come down?
On the surface, there's plenty for Apple shareholders to cheer about in the near term, especially if earnings turn out to be as rosy as everyone's expecting.
iPod sales are expected to keep shattering records. The company's recently unveiled nano, an ultra-thin iPod meant to replace the mini and released two weeks before the quarter's end, seems to be on track to sell well. Mac sales also seem to have done well for the quarter.
The bad news: The stock's still high relative to earnings, growth is slowing and investor expectations are not coming down.
"It's always worrisome when a company has an unsustainable multiple that implies continued growth rates that'll be hard to achieve," said Roger Kay of Endpoint Technologies Associates.
The company also has to deal with the transition from using chips made by IBM (up $1.44 to $81.94, Research) and Freescale Semiconductor (down $0.80 to $23.03, Research) to Intel (down $0.34 to $23.48, Research) processors in some Macs, which could dampen buying in the near-term if consumers wait for the new models to come out.
Most importantly, while its iPod has been a runaway smash, analysts agree that Apple can't get by on record iPod sales alone – especially once growth of the popular product starts to wane. This is why analysts are paying close attention to Mac sales for the quarter.
"That's the key focus, because the question on this company is can you take a $200 iPod sale and turn it into a $1,500 computer sale," said Cross. But Cross said she feels the company will maintain solid earnings growth based on forthcoming products.
iPods still white hot
In addition to looking at how PC sales fared during the critical back-to-school season, analysts will also be paying close attention to iPod sales.
UBS analyst Benjamin Reitzes and his team estimate Apple shipped 6.75 million iPods in the fourth quarter. They based these projections on an estimated 10 percent growth in iPod sales from quarter to quarter and on solid shipments of both the iPod mini and its successor, the nano.
"Our checks indicate a very solid possible build plan ... that could top 10 million nanos (in the current quarter) alone," the analysts wrote.
Through its innovative design, competitive pricing, and a knack for figuring out what it would take to get consumers to adopt digital music, Apple has crushed competitors. The question some are asking is when the iPod juggernaut will finally slow down, and what that will mean for Apple.
"There's a sense the iPod market is in full flood and not going to be much bigger than it is, (and that) we're at peak growth right now," said Roger Kay of Endpoint Technologies Associates, a market research firm.
But Michael Gartenberg, an analyst at market research firm Jupiter, said that the iPod may have caught on in urban areas, but it's far too early to call a time of death on its growth prospects.
"If you live in New York City, it's like one big Apple commercial," he said of Apple's dominance in the portable MP3 player market. "But if you're not in New York or San Francisco, you don't see this same level of technology penetration. Right now the market is Apple's."
And one more thing...
It's a news-heavy week for Apple. Interestingly, the company has chosen the day after its earnings report to make an announcement that it won't talk about but what many expect will be a video-enabled iPod, upgrades to its Power Mac and Power Book lines, or both.
Either way, Apple watchers note that trying to predict what Jobs is going to do next can be an object lesson in how to look foolish.
"When Steve Jobs says 'one more thing', that's usually pretty big; it's probably going to be an event of some significance," said Jupiter's Gartenberg.
Reitzes at UBS said that while Wednesday's event may not launch the video iPod, his firm believes one is in the works, along with changes to Apple's iTunes software that will enable users to download related content.
Reitzes added that he and his team believe Apple may be planning a Tivo-like product and service that could eventually serve as a home media hub.
Will tech bounce back in the second half? Click here.
A video iPod preview: More here.
Analysts quoted in this story do not own shares of Apple, but UBS has banking ties to the company.