Apple (Nasdaq: AAPL) Earnings Need to Be a Home Run to Push Stock Higher

Only a major earnings beat will do much for Apple stock in the short term, but that doesn't seem likely given the company's own modest guidance.

Part of reason for the ho-hum expectations is that the Cupertino, Calif.-based tech giant introduced no new products or upgrades in the quarter, giving customers no fresh incentive to buy.

Historically, the March quarter is something of a letdown following the massive sales Apple typically sees in the December quarter due to holiday buying.

Overall, Wall Street is looking for earnings per share of $10.16 on revenue of $43.6 billion. If Apple earnings hit those numbers, we'll get a minimal $0.07 increase in earnings per share - less than 1% - and flat revenue from the same quarter a year ago.

The one silver lining to an otherwise sleepy quarter will be sales of software and services, primarily through the iTunes Store. Sales in this category, mostly ignored by analysts, are expected to rise 25% to 30% to more than $5 billion.

Another possible bright spot could be iPhone sales, with the March quarter being the first full period of sales to include the deal with China Mobile Ltd. (NYSE ADR: CHL), although some reports say adoption has been slow due to the slow build-out of the carrier's 4G network.

Pulling in the other direction is the possibility that many Apple customers are holding out for two larger-screen iPhone models (a 4.7-inch and a 5.5-inch) expected to arrive in the fall.

Analysts are looking for iPhone sales of 37.7 million units, slightly higher than the 37.4 million sold in the year-ago quarter.

The same goes for iPad sales. Expectations are for 19.7 million units, compared to 19.5 million last year.

Meanwhile, Mac sales will probably reverse their slide of last year, with sales of 4.03 million units showing incremental growth over sales of 3.95 million units in the year-ago quarter.

While not a disaster for Apple, such mediocre earnings have a much bigger story to tell...

Flat growth in pretty much every product category is not just the result of no new products, but the reality that the mobile revolution that Apple helped pioneer is reaching maturity.

Most of the people in the world who want a smartphone or tablet already have one by now; the market is almost all about replacements and repeat sales. And while Apple is holding its own there, mature markets don't generate 100% growth, the kind of numbers to which many AAPL investors grew accustomed in the years from 2007 to 2012.

Without that dramatic growth in sales of its mobile hardware, Apple stock has settled into a range between $500 and $570. Ahead of earnings on Wednesday it's trading at $528.45.

The recent stock buyback program has helped set a floor under the AAPL stock, but can do little to propel it significantly higher.

Sure, new iPhones and iPads in the fall will help boost sales seasonally and maybe give AAPL a short-term pop. But Apple stock can't break out of this range until the company comes out with some completely new product or service.

The rumor mills are full of possibilities here. Apple is alleged to be working on everything from a big-screen TV (very unlikely) to a smartwatch (very likely) to a mobile payment service (also very likely).

Some critics have already started calling for Apple Chief Executive Officer Tim Cook's head for his failure to deliver either new products or substantial growth in any of the existing ones. He doesn't need to fear for his job, but the change in Wall Street's mood is telling - and worrisome.

Apple is known not to debut products until it feels they are truly ready, but unless it actually brings out some major new thing in 2014, the company risks losing its status as a leading Silicon Valley innovator - with other tech titans like Google Inc. (Nasdaq: GOOG) and even Facebook Inc. (Nasdaq: FB) only too happy to fill the void.

Do you think Apple earnings will beat the Street? Where do you see AAPL stock headed in 2014 and 2015? Let us know on Twitter @moneymorning or Facebook.

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