Apple heads into choppy waters as new iPhone awaited

By Poornima Gupta

SAN FRANCISCO (Reuters) - Apple Inc faces an unusual phenomenon when reporting earnings this time around: low expectations.

Few are expecting the world's most valuable technology company -- which surpasses Wall Street expectations with near regularity -- to deliver a bumper quarter once more on Tuesday.

The main reason: consumers holding out for the new iPhone.

Apple may still surprise market watchers, but many Wall Street analysts and investors remember how chatter over the launch of a new iPhone last year caused Apple to miss quarterly expectations in the fall, for the first time in years.

The iPhone 5 is only expected to hit store shelves around October -- just in time for the holidays -- with a thinner, larger screen and fine-tuned search features. Couple that pre-launch lull with slowdowns in Europe and China, Apple's biggest markets outside of North America, and sentiment on the Wall Street darling is more muted than many can remember in a while.

"No longer is Apple the company that beats every time," said Tim Lesko, portfolio manager at Granite Investment Advisors, which owns Apple stock. "I expect Apple to beat Apple's guidance, but I don't know whether they will beat Wall Street's guidance."

Tony Sacconaghi, analyst with Bernstein Research, sees a reasonable chance Apple will miss expectations on revenue, citing "macroeconomic weakness in China and Europe, a product cycle lull in the iPhone, a later than expected introduction of the new iPad into China, and the late quarter introduction of new Mac notebooks."

Any hiccup in demand for the best-selling smartphone can have a big impact on both revenue and profits as the five-year old device accounts for nearly 50 percent for Apple's revenues. And it comes at a time Samsung and other manufacturers that use rival Google Inc's Android software are chipping away at its market share.