Traditionally, Apple launches its new MacBook Pros in April, well into its third quarter. This year, it didn’t. It launched them in the second, and that’s where the resulting spike in sales will be reflected.

And if the company sells enough of them, we could see a nice little bump in its earnings-per-share for the period, says UBS analyst Maynard Um.

“The refresh comes with about 6 weeks remaining in what is typically Apple’s seasonally weakest Mac quarter of the year,” Um said in a note to clients. “However, AAPL’s last three MacBook Pro refreshes came in FYQ3, so the accelerated cycle could provide upside to our estimates for this quarter. Every incremental 100,000 portable Mac units would add ~$0.02 to EPS in FYQ2 assuming slightly lower gross margins.”

After all, the CDMA iPhone Apple’s built for Verizon promises to expand the company’s addressable market domestically and abroad. The device isn’t exclusive to Verizon, which means Apple’s almost certainly going to pursue additional partnerships with CDMA carries in other parts of the world– China Telecom and SK Telecom, for example.

“We see this as the single biggest lever Apple has to pull in calendar 2011,” said Piper Jaffray analyst Gene Munster, who raised his iPhone unit estimates by 2.5 million because of the Verizon deal.

JP Morgan analyst Mark Moskowitz took a similar view, suggesting that the Verizon iPhone could boost Apple’s EPS by at least $1.25 per annum. “For Apple, we believe that this new carrier relationship will be a major catalyst for U.S.-related iPhone sales over the next 18-24 months,” he wrote. “In our view, Verizon’s wireless network offers a higher quality user experience compared to AT&T’s. We expect that this dynamic will drive a significant numbers of subscribers to switch to Verizon, in addition to the adoption rate of the iPhone by existing Verizon subscribers.”

At Standard & Poor’s, Clyde Montevirgen wrote that the deal more than doubles Apple’s U.S. market opportunity and said he expects incremental unit sales of 7 million via Verizon in calendar 2011.

UBS analyst Maynard Um issued this bullish call: “Apple has set itself up for a solid year of iPhone sales. Today’s agreement with Verizon Wireless should provide additional momentum to already strong iPhone unit growth. We also expect the company to launch the iPhone 5 this summer which would serve as another catalyst for this product segment. We currently expect AAPL to ship 67.3mn iPhone units in CY11.”

And finally, over at William Blair, analyst Brian Nugent offered a few observations about the Verizon iPhone’s effects on other industry players (beyond AT&T), specifically Research in Motion and Qualcomm. For RIM, he views it as a clear negative. “While dependence on Verizon has declined significantly in the last year, Verizon still accounts for roughly 10% of RIM’s sales (by our estimate),” he said. “An iPhone at Verizon will further pressure RIM’s market share and net subscriber additions in the United States, and could hurt its average selling prices and gross margin.”

But for Qualcomm, it’s a boon. “Although we view the introduction of the iPhone at Verizon as positive for Qualcomm (which we believe is the baseband provider in the iPhone), given that Qualcomm has over 95% of Verizon baseband share, today’s announcement may not be material to the company in the near term,” he said. “On a longer-term basis, we view today’s announcement as the beginning of a closer working relationship between Apple and Qualcomm that may potentially extend beyond the Verizon handset deal.”

PREVIOUSLY:

• AT&T: Verizon iPhone? Whatever.
• Verizon iPhone: What, AT&T Worry?
• Why Verizon’s iPhone Won’t Be So Bad for RIM
• How Might the Verizon iPhone Differ From the iPhone 4 (Besides Being Able to Make Calls)?
• Tired: Speculating About Verizon iPhone. Wired: Speculating About Verizon iPhone Sales.
• Verizon iPhone to Debut With Unlimited Data Plan
• Apple CEO Likely to Appear at Verizon iPhone Event
• Verizon Event Set for Tuesday–iPhone Time

Sales were $8.6 billion, helped mostly by new software license sales that grew 21 percent to $2 billion, while updates and product support revenue grew 12 percent to $3.7 billion. The consensus estimate was $8.34 billion. Sales grew 47 percent from the same period a year ago.

Non-GAAP per-share earnings were 51 cents, beating the 46-cent forecast estimate of analysts surveyed by Thomson Financial. Earnings after one-time items were 37 cents, up from 29 cents a year ago.

Gross margins on Sun-branded hardware increased to 53 percent.

Shares are up almost 4 percent in after-hours trading.

There’s a quote from CEO Larry Ellison, reminding us how fast his new products are, and digging once again at the competition:

“Sun’s new SPARC Supercluster computer shattered the world record for database transaction processing performance by running 3 times faster than IBM’s fastest computer, and a stunning 7.5 times faster than HP’s best ever database performance,” said Oracle CEO, Larry Ellison. “Our new generation of Exadata, Exalogic and SPARC Supercluster computers deliver much better performance and much lower cost than the fastest machines from IBM and HP.”

Here’s another quote, from Oracle co-President (and former HP CEO) Mark Hurd, about the Exadata product line:

“Since joining Oracle I’ve met with and visited many customers that have expressed a high level of enthusiasm around our strategy of engineering hardware and software that works together,” said Oracle President, Mark Hurd. “That enthusiasm translates into an Exadata pipeline that has now grown to nearly $2 billion. That number is a good leading indicator that customers are planning to increase their investment in Oracle technology.”

Yes I would say there’s enthusiasm. It was precisely because of the Exadata line that Macquarie Research upgraded Oracle today.

More from the conference call, which starts at 5 pm ET.

4:53 pm: Seven minutes to go before the Oracle earnings conference call starts. Right now it’s all mellow classical guitar.

Call is running a little late.

5:10 pm: And we’re underway with the safe-harbor statement.

Ellison, Hurd and president Safra Catz are on the call.

Americas grew 32 percent in U.S. dollars.

5:15 pm: Balance sheet: $24.8 billion in cash and short-term investments.

Generated $3.7 billion in free cash flow.

5:15 pm: Safra Catz is now speaking. We exceeded the high point of license guidance. Even excluding a payment for legal fees, we beat guidance by 4 cents.

5:16 pm: All geographies reported double-digit growth.

5:16 pm: “We continue to take share from SAP.”

5:17 pm: With Sun, included operating margins were 44 percent, which is better than SAP. [Another dig.]

5:18 pm: Hardware guidance: $1.1 to $1.2 billion in revenues.

Non-GAAP EPS expected to be 48 to 50 cents, and 34 to 36 cents on a GAAP basis.

Here’s Larry:

5:19 pm: Our goal is to be No. 1 in high-end market for servers. Right now our numbers are behind HP and IBM.

5:20 pm: IBM’s and HP’s servers are slow, and software is slow and expensive and have no software value-add. [Another dig at the competitors.]

5:22 pm: Exadata pipeline continus to grow. We expect our new generation of Sun machines will enable us to win significant share, and position us in the No. 2 position behind IBM very soon. And then we’ll fight it out for No. 1.

5:23 pm: Now Mark Hurd is speaking.

5:23 pm: I want to focus on our opportunities to grow significantly.

5:24 pm: Deal volume was spread across companies of all sizes and strength in the public sector as well.

5:24 pm: All of our customers and competitors are reacting to us.

5:25 pm: 150,000 Middleware customers. We ended the quarter with a record hardware backlog.

5:26 pm: Now going to Q&A:

A question from UBS. Are you starting to see a halo impact on adoption of the Oracle suite?

Larry: Close rates are improving. You’ll see great improvement in Exadata sales from Q2 to Q3. Because it’s new, people were running a lot of benchmarks and trying it out first. We’ll sell a lot more Exadata in Q3 than in Q2.

As for the halo effect, when you buy these servers you buy them to run specific software. Engineer them at the same time and make sure they run well together. We have a huge advantage over IBM and HP. The notion of systems, hardware and software that run well together will dominate the high end of the business.

Q: You clearly have a lot of irons in the fire with Fusion apps coming up and Exadata. Focus on Exalogic. Can you share early feedback from customers and compare that to Exadata ramp.

Mark: Exadata experience benefits Exalogic. We’ve matured the use case, we think we know where the targets are. The Exadata experience is a big deal for us.

5:31 pm: A question about Fusion Middleware.

Larry: We’ve been in the middleware business for a long time. With release 11 everything has been rewritten. It’s a much better user experience, you can patch our entire suite with a single file. We think the fact that we have an integrated suite gives us a huge advantage over IBM.

5:33 pm: A question about Europe. It was better than expected. Apps business was really strong. Look at competitors. You’ve been gaining share against SAP. We are seeing a pickup in general environment.

Hurd: I’m not an economist, but we’re doing well in Europe. It was broad-based. It was not singular to a deal or country. It was broad-based to countries where we have been gaining share. It’s been one quarter after another, a pretty steady beat.

Larry: We had a wonderful set of industry specific applications, in telecommunications and banking and retail, and that’s unique vis-a-vis SAP. that has helped us a lot to establish us in a lot of industries. Also Fusion is right around the corner.

5:35 pm: Q: How frequently is an Exadata deployment resulting in the displacement of a competitor’s product?

Hurd: About 70 to 75 percent of the time. About 20 to 25 percent of the time it’s a consolidation.

We’ve sold Exadata now in 50 countries, and 30 to 35 percent of our customers have made a second purchase. You’re starting to see repeat purchases. We’ve learned a lot about this and so as we launch Exalogic we can accelerate our learnings.

5:36 pm: Q: Margin was also great. What can we expect going forward and what were one-time items?

Catz: In general, it’s the business. The only nonrepeatable thing is the $120 million legal settlement, which we will not repeat. Hardware margins and operating margins, this is something we’ve done for many years.

5:38 pm: Q: What is visibility for database licenses?

Larry: A couple quarters ago, someone noticed database licenses were growing nicely. We think Exadata is going to be a nice turbocharge to our database business. Across the board our database business is going to get strong with Exadata.

I just looked at after-hours trading in Oracle shares and they’re up more than 4.5 percent.

Hurd: “The secret to Exadata is bringing the smarts to the data, versus bringing the data to the smarts.”

5:42 pm: Q: What continues to drive the database business? Is it just core database, add-ons?

Larry: We think our technology is getting faster and more reliable at a faster rate than that of our competitors.

5:43 pm Larry: As far as applications, we think there are lots of reasons we continue to gain share every quarter over the last few years over SAP.

It’s the industry-specific applications. We have telecom companies that are running only Oracle software. We have some banks that are making the same kind of commitments up and down the stack. SAP just doesn’t have that.

5:44 pm: Larry: We’ve got this extremely modern Java-based suite called Fusion that is going to strengthen our competitive stance against Salesforce.com and against Workday.

5:46 pm: That seems to be it. The call is concluded.

Apple’s shares broke $300 for the first time last week, pushing its market cap to well past $280 billion–second only to that of oil behemoth Exxon Mobil. Should the company’s rally continue, it won’t be long before it overtakes Exxon on the Standard and Poor’s 500.

And there’s no reason at all to think that it won’t. Apple is scheduled to report its fourth quarter results today after the bell, and by most accounts it will be another blowout. Consensus among analysts seems to be that strong sales of the iPhone 4, the iPad and the Mac will push Apple’s earnings per share to $4.05 on revenue of $18.8 billion–quite a leap over the earnings of $1.82 per share on revenue of $9.87 billion the company posted during the same period last year.

And according to some analysts, this quarter’s leap may well leave the company poised for an even higher one in the next quarter. Said UBS analyst Maynard Um, “With continued momentum in all product lines as well as easing supply constraints for both iPhone and iPad, we see the potential for Apple to surprise to the upside on guidance again.”

J.P. Morgan (JPM) is even thinking about supporting Google’s (GOOG) Android, Bloomberg reports:

JPMorgan is testing the Apple Inc. device and smartphones based on Google Inc.’s Android software, said the people, who didn’t want to be named because the plans haven’t been made public. The bank is the second-largest in the U.S. by assets and has about 220,000 employees worldwide.

UBS AG, Switzerland’s biggest bank, said it is also considering allowing its staff to use iPhones for company messaging as more of them opt for the Apple product. UBS has more than 63,000 employees…

JPMorgan would not buy iPhones or Android phones for employees, as it now does with BlackBerrys. Rather, the bank would allow employees to use the devices to send and receive corporate e-mail if they make the purchase themselves, the other person said.

The iPhone (and Android) migration into the (officially sanctioned) workplace isn’t new, but the move to Wall Street would be important symbolically. Bankers and their cohorts were the ones responsible for boosting BlackBerry years ago, when they called them “crackberries” and flashed them as status symbols.

The flip side of the story is also the version that gives RIM a fighting chance: BlackBerries used to be a corporate tool, but they’re now very much a consumer device. So there’s a scenario, theoretically, where it switches places with Apple’s (AAPL) phone line, which started out life in 2007 as an expensive toy you couldn’t use for work. Things move fast….

“Sales of traditional notebooks appear to be feeling pressure from the iPad, causing a scramble by vendors to launch iPad-like tablets,” Um wrote in a note to clients. “We believe that a majority of this impact is occurring on the lower end of PC sales as the iPad is priced close enough to this range that it becomes attractive to consumers looking to make purchases within this segment. We are not sold that the iPad is purely cannibalizing PC sales, as the functionality of the iPad can not yet fully match the functionality of notebook PC’s. However, consumers who purchase iPads may be more willing to delay purchases and upgrades of existing PC’s.”

And with few, if any, real iPad rivals at market, this trend will continue well into 2011. While competition in the tablet market is increasing–and rapidly, too–viable threats to Apple (AAPL) will be few and far between, says Um. With that in mind, he expects iPad unit shipments for calendar 2011 to be 28 million, a number that Um says “could still be conservative.”

[Image credit: Gizmodo commenter modestmouse and RBC Capital Markets]

Early this morning, Dell said it will pay about $1.15 billion cash for the data-storage company–an 86.5 percent premium over 3Par’s Friday closing share price of $9.65. For Dell, which has been looking to diversify away from its core PC-manufacturing business, adding 3Par to its portfolio is one more way to do so, solidifying its position in the storage and services markets. A pure-play PC and server maker no longer, the company is fast transforming into a full-fledged consulting and services concern to boot, something it must do if it’s to compete with enterprise-technology rivals like Hewlett-Packard (HPQ) and IBM (IBM). Said UBS analyst Maynard Um, “The 3Par deal helps bolster Dell’s competitiveness and profitability in the mid & high-end of the Fibre Channel SAN segment and strengthens its position for cloud & virtualized environments (key long term areas of focus). We also see opportunity for Dell to drive solid growth of 3Par systems (similar to success achieved with EqualLogic) as only 20% of 3Par sales are from outside the US & 80% of sales come from repeat customers, which provides significant growth opportunities by leveraging Dell’s scale, distribution and global reach.”

Gene Munster, Piper Jaffray
While Apple had yet another stellar quarter, investors will wonder if the pace of growth is sustainable. We believe it is, given Apple has small market share in large, growing markets. We estimate that if Apple meets our Mac, iPhone, and iPad targets in 2011, the company will have only about 5 percent market share in the phone and computer markets, a number that will likely grow over time.

Mike Abramsky, RBC
Apple is now benefiting from what we are dubbing a “Cascade of Cool”–three strong, synergistic product cycles–iPhone, iPad and Mac, combining together synergistically to drive the strongest outperformance in 4 years–with more to come, as Apple remains well positioned against large, addressable markets. Additional drivers/catalysts expected include international rollouts, voice to Smartphone adoption, PC to Mac migration, enterprise adoption.

Chris Whitmore, Deutsche Bank
While current quarter results were very impressive, we see open runway for the 3 major product cycles ramping in C2H10 and beyond which should drive continued momentum. The iPad is off to a very strong start with demand characterized by Apple as “amazing” with widespread appeal to the mass market (i.e. already moved beyond “early adopters”). iPhone 4 demand is outstripping supply despite widely publicized antenna concerns (which we expect to dissipate). Both products continue to ramp internationally (iPhone with 154 carriers in 88 countries) while iPad will be available in 9 additional countries by July 23rd. Finally, we expect the recently refreshed MacBook lineup (and future updates) to perform well in the back-to-school and holiday seasons.

Yair Reiner, Oppenheimer
We were expecting Apple to deliver a strong F3Q10. But we hadn’t girded ourselves for a mammoth revenue forecast, and neither, we believe, had the Street. To those (like us) who fretted that Antennagate might hamper iPhone sales, Apple’s guidance seems to say “antennagate schmantennagate.” Apple is seeing a swell of demand across its product lines and increasingly compelling evidence that the iPhone has unleashed a halo effect in the international markets. These are facts on the ground that even Apple’s stubbornly bearish guidance can’t resist.

Charlie Wolf, Needham and Co.
This is the Apple story in a nutshell. The company remains a small fish in some very large ponds. Despite a quadrupling of shipments over the past several years, the Mac, the major surprise in the third quarter with record shipments of 3.5 million, still commands a small share of the PC market. The iPhone’s share of the fast growing smartphone market is likewise comparatively small. And while the iPad is in a class of its own, it’s beginning to cannibalize the much larger netbook PC market. Indeed, the iPad has jumped to the mainstream market, passing through the early adopter market in an instant.

Maynard Um, UBS
Guidance was much stronger than expected as the rev outlook of ~$18b was uncharacteristically higher (by $1bn) than Street ests. We believe AAPL typically guides to a conservatively achievable target, making guidance all the more impressive. With AAPL selling nearly every iPad/iPhone 4 produced, key variable to magnitude of pot’l upside will likely be the pace of capacity increases.

Katy Huberty, Morgan Stanley
The market underestimates the earnings power of Apple’s mobile Internet devices. We view the combination of new product launches, broader distribution (carrier, international, enterprise), more attractive pricing and strong upgrade rates as the key demand drivers over the next two years. Additionally, we believe iPhone, iPod Touch and iPad margins will remain above the corporate average, driving EPS upside as mix improves.

As you can see, Apple’s financial performance has sent the analyst community into paroxysms of praise. Not a week after its Antennagate press conference, the company already seems to have extricated itself from the public relations quagmire surrounding the iPhone 4’s reception woes.

As RBC analyst Abramsky quipped, there’s no deodorant like success.

“We now believe there is a 50% chance the company offers a free modification to current iPhone owners and includes the modification on all future iPhone 4s (e.g. a coating around the antenna),” Piper Jaffray analyst Gene Munster told clients today. “We have no knowledge of the company’s plans,” he said, “but we see an in-store fix and modification to future iPhones as the likely scenario (not a recall). Despite these issues, consumers love the iPhone 4; ultimately we believe Apple will manage these issues in a consumer-friendly way and maintain its pristine brand.”

UBS analyst Maynard Um isn’t betting on a recall, either.

“We believe a recall is unlikely as any recall would presumably be more immediate and sales halted by Apple and its operator partners,” he wrote in a research bulletin. “However, if the solution were straightforward, investors are likely to wonder why it wouldn’t be issued by press release (though Apple already addressed the issue in a statement on July 2). We believe an event is necessary, as a press release to address what has become a ‘loud’ issue would likely have drawn more ire.”

And from the shadowy world of anonymous insiders, a “person familiar with the matter” tells the Wall Street Journal that a recall is not in the company’s plans.

Sounds about right. As I wrote the other day, “an iPhone 4 recall? Steve Jobs would rather recall hiring John Sculley.“

[Image credit: Rick Smolan]

“Given the size of the iPhone 4 pre-order and our analysis of the expected upgrade cycle, particularly the remaining 3G users, we believe the full launch weekend of June 24-27 is shaping up to potentially be a 2 million-3 million iPhone event,” Fidacaro said in a research note today.

“[That’s] about 2-3x higher than the one million units sold over the first three days for both the 3GS and 3G launches,” the analyst added. “The strong initial demand seen during the pre-order is a positive for the June quarter and has apparently been limited by supply with new orders now indicating a July 14 delivery date.”

With 600,000 pre-orders racked up as of Wednesday and a few days yet to take more, a two-million unit launch weekend for Apple (AAPL) doesn’t seem much of a stretch. Frankly, neither does three million, given the iPhone 4′s feature set and price, as well as the fact that this year’s launch weekend begins on a Thursday rather than a Friday.

FURTHER READING

• Walt Mossberg’s iPhone 4 Review
• Analysts Raise iPhone 4 Sales Forecasts From Huge to Ginormous
• New iPhone 4 Pre-Orders Now Delayed to July 14
• Apple: Sorry We Sold 600,000 iPhone 4s Yesterday
• iPhone 4 Pre-Orders Sold Out at Apple, Suspended at AT&T
• What Happened to the White iPhone 4?
• AT&T Now Dropping iPhone Calls and iPhone 4 Pre-Orders
• And if You Have Any Questions About Your New iPhone 4, Just Ask Our Radio Shack Geniuses
• Everything You Need to Know About the iPhone 4

In a research note this morning, Piper Jaffray’s Gene Munster increased his iPhone sales estimates for both the June and September quarters to 9.5 million from 8.5 million, arguing that Apple (AAPL) will likely sell one million iPhone 4s during the device’s first three days on the market. He also noted that the six-month extension on upgrade eligibility pricing that AT&T (T) is offering should significantly juice demand.

“AT&T has pulled forward existing iPhone users’ eligibility for upgrade pricing by up to 6 months,” Munster wrote. “In other words, all early iPhone 3GS buyers will be eligible for upgrade pricing on the iPhone 4, but last year early iPhone 3G buyers were not eligible for the iPhone 3GS upgrade pricing. Specifically, we believe that the 8.4m iPhone users activated at AT&T between the Sept-08 and Jun-09 quarters will be eligible for upgrade pricing.”

Over at UBS, analyst Maynard Um went Munster one better. “We expect the iPhone 4 launch to be larger than the iPhone 3GS launch last year which sold 1 million units in its first 3 days. Although dependent upon initial supply, we see the potential for Apple to sell 1 million units on the first day of launch.”

At this point, Um’s scenario seems the more likely. As of this writing, Apple has taken pre-orders for more than 600,000 iPhone 4s. With more than a week to go until the official launch, it’s entirely plausible that the company will hit that number. And if launch day walk-in sales are anything like they’ve been in the past, it may far exceed it.

“The iPad launched in US Apple retail stores on 4/3, impacting nearly the entire month of Apple’s sales in April. As a result, April NPD data gives us the first sign of the degree to which the iPad cannibalizes iPod or Mac sales,” Munster noted. “From the early NPD data, it appears that the iPad has a minimal cannibalization impact on Mac sales, and could be slightly cannibalizing iPod sales.”

The analyst doesn’t expect this to be a big problem for Apple (AAPL). “We believe in the long run Mac cannibalization will exist, but will be minimal,” he concludes. “Apple has successfully limited the iPad functionality to primarily content consumption, vs. content creation on a Mac. And relative to the iPod, the physical size of an iPad provides a meaningfully different value proposition (portability vs. screen size).”

Obviously, it’s a little early for definitive calls on just what sort of effects the iPad is having on sales of Apple’s other products. That said, Munster’s analysis of NPD’s data does jibe with a small survey by UBS analyst Maynard Um that found that most iPad buyers do not view the device as a replacement for their traditional computers.

As I wrote in an earlier post, “So most likely, the iPad will prove additive for Apple. In fact, I wouldn’t be surprised if it generates a halo effect around the company’s products similar to that created by the iPod. Certainly, that’s the sense one has paying a visit to an Apple Store these days or being spotted with an iPad in public.”

UBS analyst Maynard Um surveyed customers in line to buy a 3G iPad in New York on Friday and found that only a handful hoped the iPad would replace their traditional computer. The other 94 percent said they were purchasing the device for Web browsing and personal entertainment. In other words, few people are under the illusion that the iPad is a $499 MacBook or a viable Mac replacement. In that sense, Apple truly has positioned it as a third category of mobile device.

Said Um,”The survey further supports our view that the iPad will not cannibalize Macs & we continue to view the device as a largely incremental growth opportunity for Apple.”

So most likely, the iPad will prove additive for Apple. In fact, I wouldn’t be surprised if it generates a halo-effect around the company’s products similar to that created by the iPod. Certainly that’s the sense one has paying a visit to an Apple Store these days or being spotted with an iPad in public.

Consider this from J.P. Morgan analyst Rod Hall: “No matter how good the product, we believe that penetrating the channel will continue to be difficult for Palm and will only get tougher as more competitive touch handsets come to market through the year.”

And this from UBS analyst Maynard Um: “Demand weakness is not necessarily a surprise as we noted earlier that a slowing US net add environment would likely have the greatest impact on Palm given its small base. However, the magnitude is slightly surprising to us given management’s prior conviction & visibility to orders. While Palm cites deferral of orders to future periods, WebOS demand will likely be called into question. With the US market being Palm’s best opportunity for more levered growth, we are more concerned with the future growth opportunity.”

Finally, there’s this from Deutsche Bank analyst Jonathan Goldberg, who says it’s going to take a long, long time for Palm’s fundamentals to improve, given its weak traction in the smartphone market: “Our concern now is that bad publicity feeds on itself, with the poor stock price performance denting Palm’s brand and causing potential carrier partners to lose interest,” he wrote in a note to clients.

“There are also potential upside risks as well including the potential for Palm to be acquired, but we think the poor showing to date limits the company’s negotiating leverage,” Goldberg added. Ultimately, we think Palm has the resources to survive and potentially build its position back, but it will take considerable time and they face serious risks in the interim.”

Serious risks, indeed. If Palm (PALM) has fared this poorly in the smartphone market of 2009, how will it fare in the smartphone market of 2010 and the more formidable rivals the year brings with it?

It was hard enough to compete against Apple’s (AAPL) iPhone and RIM’s (RIMM) BlackBerry last year. In 2010, Palm must compete with these popular smartphones and a host of new Android phones, not to mention some impressive Windows Mobile 7 devices heading to market. No easy task, particularly when carrier partners like Verizon (VZ) and Sprint (S) don’t quite seem to be giving Palm devices the marketing push they need to succeed.

But you won’t hear Apple boast about how much money it’s making from iTunes. Because there’s not much to boast about.

Even at today’s hyper volume, the digital store is still running at “a bit over break-even,” the company reminded analysts during its earnings call last month.

Here’s the relevant excerpt from that call, via Seeking Alpha (thanks to Venrock’s David Pakman for pointing this out yesterday at the Digital Music Forum East):

Maynard Um–UBS
We have seen a number of industry revenue forecasts for applications and just given kind of the expected explosive growth there I am just wondering if that is still a break-evenish type of business as you look forward over the next couple of years?…

[Apple CFO] Peter Oppenheimer
…Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As Oppenheimer says, this isn’t a new development. Apple (AAPL) has always maintained that iTunes wasn’t a real money maker. It’s supposed to help sell iPods, iPhones, and soon, iPads.

For years, industry observers figured that as the iTunes business scaled, this would change. An alternate theory, held by some of Apple’s media partners–the company was being overly modest about its success.

Apple doesn’t break out iTunes sales, but lumps them into a category called “Other music related products and services,” which generated net sales of $4 billion last year. That’s an increase of 21 percent over 2008, and the company attributed this growth to “increased net sales of third-party digital content and applications from the iTunes Store.”