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Customers wait outside the Apple store to buy the new iPhone 6 at the Eaton Centre in Toronto on Sept. 19, 2014.Hannah Yoon/The Canadian Press

Apple Inc. Chief Executive Officer Tim Cook is facing some extra pressure today, when Apple posts earnings for its quarter that ended in December.

That quarter is typically the most lucrative period for the company because of the holiday shopping season. This year, the scrutiny is even higher given that the earnings will provide the first official indicator of how a slew of new products – from larger-screened iPhones to slimmer iPads – have performed.

"People are looking for a blowout iPhone quarter," said Alex Gauna, an analyst at JMP Securities LLC. "They need to come in above the high-end of guidance on revenue and they need to have that driven to a large degree by iPhone success."

In October, Cook forecast the fiscal first quarter would be the best ever, with revenue of $63.5-billion to $66.5-billion. On average, 38 analysts surveyed by Bloomberg predict an even higher $67.5-billion, as well as a record profit of $15.4-billion. Kristin Huguet, a spokeswoman at Apple, declined to comment.

Here are five things to watch for in Apple's results:

1) IPhone 6 versus iPhone 6 Plus Demand in China for the larger-screened iPhone 6 and iPhone 6 Plus may have helped increase Apple phone sales 27 per cent to 64.9 million units during the quarter compared with a year ago, according to the average estimate of 10 analysts.

Last quarter was the first full period of sales for the iPhone 6 with a 4.7-inch display and the 5.5-inch 6 Plus, which costs $100 more. While UBS had calculated that 20 per cent of sales would be the 6 Plus, Steve Milunovich, an analyst at UBS, is now estimating it's more like 30 per cent.

The average selling price of iPhones may have risen to $668 per unit, according to the survey of analysts, from $637 during the same quarter a year ago, according to Bloomberg data. The increase should help profit – Apple forecast gross margins would widen to 37.5 per cent to 38.5 per cent from 37.9 per cent during the same period a year ago. Analysts predict 38.5 per cent for the quarter.

2) Apple versus Russia Chief Financial Officer Luca Maestri warned in October that the strengthening U.S. dollar posed a challenge. In December, Apple briefly halted online sales in Russia on the day the country's currency lost as much as 19 per cent.

Worldwide, the net average selling price of iPhones may have been hurt by 2.8 per cent because of the stronger U.S. dollar during the quarter, according to estimates by Milunovich, though that was probably outweighed by other factors, including a more expensive iPhone 6 Plus. This month, in one of the company's broadest global responses to currency fluctuations in recent years, Apple changed the prices of software applications from Canada to Europe.

"It's a fact of life if the U.S. dollar strengthens, that creates a headwind for us both in revenue and margins for our business outside of the United States," Maestri has said.

More than half of Apple's revenue during the past fiscal year came from outside of the U.S. In the current quarter, currency changes provide a "bigger headwind than recent quarters," Katy Huberty, an analyst at Morgan Stanley, said in a note to investors.

3) Mac versus iPad During the fiscal fourth quarter last year, Apple garnered more revenue from Mac computers and laptops than iPads for the first time since mid-2011. Mac unit sales rose 19 per cent on the strength of college students buying computers, while iPad sales fell for the third straight quarter as the tablet market became more saturated.

The trend may have continued into the final three months of 2014. Mac unit sales may have risen 14 per cent while sales of the iPad, which were updated to be thinner and faster, may have fallen 15 per cent, according to the average estimates of analysts as compiled by Bloomberg.

4) Apple Pay versus CVS

Apple in October rolled out its bid to replace the consumer wallet with a new mobile-payment system called Apple Pay – which hit immediate controversy. CVS Health Corp. and Rite Aid Corp. blocked the technology in their drugstores, underlining a struggle over who controls the mobile-payment world.

Apple has teamed up with major banks and credit card companies on Pay, which helps turn the iPhone 6 and 6 Plus into a payment device. CVS, Rite Aid, Wal-Mart and other retailers have worked together to create CurrentC, which offers branded mobile wallets linked directly to shoppers' checking accounts.

So far, Apple has indicated it's pleased with Pay's progress. Cook in October said the rollout looked "fantastic" and said more than 1 million activations occurred in the first 72 hours.

In December, researcher ITG said Apple Pay captured 1 per cent of digital-payment dollars in the first six weeks of operation. It took Google Wallet three years to get to 4 per cent.

5) Apple versus expectations for Apple Apple continues to be caught in a trap of having to outdo itself each time it reports earnings. Among those putting on the pressure: Billionaire activist investor Carl Icahn, who has argued that Apple shares are undervalued and should be trading at $203 a share, which would value the company at more than $1-trillion.

The anticipation may intensify as Apple's first all-new gadget under Cook's leadership as CEO gets closer to showrooms: the Apple Watch. Revealed in September and designed to appeal to both luxury-watch buyers and fitness-device enthusiasts, the smartwatch will go on sale in the U.S. early this year, Apple has said.

That means all eyes will be on Apple's forecast. For the fiscal second quarter, which ends in late March, analysts project revenue may rise to $53.7-billion from $45.7-billion a year ago and that the quarter's gross margins may be 38.6 per cent. Apple's projection could fall short of estimates because of challenges from currency and slipping iPad sales and the smartwatch's introduction, Huberty said.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

SymbolName% changeLast
AAPL-Q
Apple Inc
-1.06%171.48
CVS-N
CVS Corp
+0.42%79.76
MS-N
Morgan Stanley
+0.71%94.16
WMT-N
Walmart Inc
-0.91%60.17

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