Apple (AAPL) Earnings Expected to Grow Despite Falling iPad Sales

Here’s the latest evidence of the power of Apple (Nasdaq: AAPL): The company’s expected iPad sales for the fourth quarter were slashed by 1 million units, but its iPhone sales are rising enough to increase its overall earnings forecast.

Canaccord Genuity put out a research note forecasting that Apple’s iPhone sales for the quarter ending in December are 1.5 million units more than initially expected. That’s enough to offset the predicted erosion of Apple’s iPad sales, which are getting some healthy competition from Amazon’s (Nasdaq: AMZN) new Kindle Fire electronic tablet. At $199, the Kindle Fire is less than half the price of the $499 iPad, though it doesn’t perform as many functions. Canaccord analyst Michael Walkley expects Apple to see a 21% decrease in its iPad market share this quarter.

The depth of Apple’s product offerings, however, is truly on display this quarter. The iPhone 4S, which debuted in early October, is flying off the shelves at an even higher rate than anticipated. Canaccord upgraded its expectation that Apple would sell 29 million iPhone units this quarter to 30.5 million units. Sales of the 4S should continue to improve, as it is set to launch in Russia, Brazil and China before the year ends.

With even bigger fourth-quarter earnings now expected in what is traditionally the most profitable quarter of the year thanks to the holiday shopping rush, Apple's stock may be poised for a major upward swing. According to Forbes, the world's premier technology stock currently has 50 “Buy” ratings, as many analysts have set a price target of more than $500. The stock is currently trading at $388 a share.