Apple Inc. (NASDAQ:AAPL)’s fourth fiscal quarter earnings report is just 20 days away. Those results will cover the company’s earnings between July and September, including the early days of the iPhone 5S and 5C launches.

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Apple conference call scheduled

On its website, Apple announced that it will hold a conference call to discuss the results from its most recently completed quarter on Oct. 28 at 5 p.m. Eastern. The company has already said that it sold 9 million iPhones during the first weekend of this year’s launch, and analysts have already been releasing reports with their estimates for Apple’s September quarter.

Apple Inc. (NASDAQ:AAPL) itself raised guidance for the quarter in September, further ratcheting up expectations for the quarter. The company said it expected the results to be toward the high end of the $34 billion to $37 billion range it provided earlier this year. It also expects to see its gross margin at the high end of the previously provided range of 36 to 37 percent.

Analyst views on Apple remain mixed

Several major financial firms criticized Apple after the iPhone 5C was unveiled, mainly because analysts believed the price point was too high. Analysts at Bernstein Research, however, continue to have high hopes for the company. Toni Sacconaghi, Jr., Jonathan Cofsky and Eric C. Garfunkel issued a report to investors this week saying that they see upside for Apple in the results to be announced this month.

They note that many investors believe Apple Inc. (NASDAQ:AAPL) should introduce an iPhone that’s priced below $300 to address that low-end market. However, they believe that the emphasis should be less on the low-end of the smartphone market and more on the question of whether the world has enough wealthy people to support continued growth of Apple’s high-end handsets.

Where do iPhone sales come from?

The Bernstein analysts begin by looking at the three places iPhone sales come from: repeat users, those who switch from another brand and those who are buying a smartphone for the very first time. In their estimates, repeat iPhone users assume a distribution curve with an average replacement cycle of two years. They believe 85 percent of iPhones are replaced within three years, with most of those replacements occurring within the first two years of the cycle.

They estimate that the other iPhone sales are first-time buyers of the iPhone, whether they’re coming from another smartphone or are first-time buyers of any smartphone at all. They include both those who are trading up from a feature phone and those who are adding a new line and buying an iPhone for that new line, most likely for someone who didn’t have a mobile phone of any kind previously.

Most of Apple’s new iPhone users are first-time buyers

The Bernstein analysts estimate that the majority of new iPhones sold in 2011, 2012 and 2013 were to new users rather than as a replacement for current users. In 2011, they estimate that first-time iPhone buyers were about 72 percent of Apple Inc. (NASDAQ:AAPL)’s iPhone sales. The following year, they estimate that first-time buyers accounted for 69 percent, and this year, they believe first-time buyers were 57 percent of all iPhone sales.

This means that of the 150 million iPhones they expect Apple will have sold in fiscal year 2013, about 85 million of them will have been to first-time iPhone buyers. In their model, the analysts estimate that over time the number of iPhone replacements will gradually grow, while the number of new iPhone users will shrink.

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Is Apple’s iPhone growth sustainable?

The analysts say Apple Inc. (NASDAQ:AAPL) will have to sell almost 125 million iPhones to first-time buyers over the next two years, including users from other smartphone platforms, in order to meet consensus estimates for its fiscal 2014 and 2015 years. They question whether this is realistic because of the increased penetration of the high-end market but ultimately come to the conclusion that Apple could pull it off.

They note that consensus suggests something similar—15 to 20 percent more iPhone units in fiscal 2015 than in fiscal 2013. They estimate that replacement sales will be about 94 million in fiscal 2014 and 120 million in fiscal 2015, but this leaves a substantial number of new buyers that will need to be found. They said if the effect from the addition of China Mobile is modest, then there is a risk that Apple Inc. (NASDAQ:AAPL) may not be able to meet these expectations.

Apple must add new carriers

The analysts note that in order to achieve the projected growth, Apple must add new carriers. If it doesn’t, then unit growth for the iPhone will likely “be more tepid” over the next couple of years. They note that the number of consumers who are able to afford a high-end smartphone is limited, as is the number of users who will switch to a different platform. They estimate that there are about 450 first-time smartphone buyers Apple could capture, plus 50 million from weaker platforms. The analysts see BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) as being the most vulnerable to a shift toward Apple.

The bottom line on Apple

As a result of their analysis, they see upside to Apple Inc. (NASDAQ:AAPL)’s September and December quarter results and possibly even going forward, especially if the company adds more carriers. However, they believe there will be “greater than normal cyclicality in iPhone sales” because of the rollout schedule. This increases the risk of downside to the company’s March and June quarters.