More Problems for Apple?

BURLINGAME, Calif.--Forget Steve Jobs' health problems. Apple has other troubles. For starters, the Cupertino, Calif.-based computer and gadget company is wading chest deep through a recession with a heavy load of pricey products on its back.

Analysts estimate that the company's earnings will fall a little less than 1% for the quarter ended in December. Net income is expected to fall to $1.21, or $1.04 billion, from $1.16, or $1.05 billion, during the year-ago period, according to analysts polled by Thomson Reuters. Sales are expected to rise to $8.2. billion from $7.5 billion during the year-ago quarter. Those figures, however, discount the power of Apple's (nasdaq: AAPL - news - people ) surging iPhone business, since Apple defers recognition of iPhone revenue. Discard the effects of the subscription-based accounting method used to tally profits and sales from iPhone and AppleTV, and Apple should be able to power ahead of last year's results.

The real problem is how Apple's portfolio of expensive gear--particularly notebooks--will fare as the recession starts to bite. We already know Apple isn't immune to the recession; over the past six months, the company's shares have fallen by more than 50% to $82.33 from $171.81.

More worrying: Apple's slice of the U.S. computer market fell to 8% in the fourth quarter, from 9.5% in the third quarter, according to recent figures released by tech tracker Gartner