Apple earnings expected to exceed expectations - whatever they are

Apple is set to post earnings for its third quarter Wednesday, and already the web is abuzz with excitement. Indeed industry analysts are positively giddy in anticipation, whipping their clients into a forward looking frenzy.

Expectations are running exceedingly high this quarter. So high in fact that nobody is quite sure what they are. Sneaky Business polled a number of analysts, revealing a surprising degree of latitude in their views.

"We expect they will exceed expectations" claimed Sarah Lopez of Leeward Stochs, an investment bank, "To a degree even we don't expect".

Another analyst, speaking anonymously, concurred, "We think they will be at least 30% over, even 40%." When pushed to name a figure the same analyst was surprisingly vague, "It doesn't really matter. Whatever the figure, we believe they will push past it. They have masses of upside potential. Masses"

Apple's ability to surpass expectations may seem like financial alchemy to some. However, we have identified a number of best practices at work that have broad applicability:

• Start low, and manage expectations down. Initial sales estimates of 250 iPhones in the first month were suspiciously low. These figures were then supported by a national target of "1% of cell phone sales in the Palo Alto area".
• Seed confusion; mix with obfuscation. Early warnings suggested that the iPhone would have a battery life of only 60 seconds. Insiders failed to deny the claims, and then seeded further interest with the anonymous posting of a "hybrid" model due out in the Fall.
• Maintain radio silence until the last minute. Apple insiders have been eerily quiet for the past seven days. In fact no-one in the company has answered a phone of any kind since last Tuesday. In addition, Steve Jobs appears to have gone to ground. He is expected to re-appear from his hidey spot just in time for this week's analyst call.
• Save the best for last. In a twist on usual financial reporting practices, Apple is said to be experimenting with a re-ordered income statement. By starting with operating expenses and taxes, Jobs can move his narrative into the more exciting revenue figure and then conclude, with a theatrical flourish, on the bottom line.

Apple reports at 2pm PDT Wednesday; Sneaky Business will provide additional Apple-related insights later in the week.