Fortune reported that Apple is likely to achieve record revenues in Q2—but the first fall in its earnings in a decade.

Apple’s revenues are expected to grow from $41 billion to $43 billion, another record for Q2, but margins are expected to have fallen substantially from a peak of just over 47 percent last year to ‘between 37.5 and 38.5 percent’ this year.

Margins tend to fall with new products, due to high initial investments and reduced yields when pushing the limits of what can be achieved (as with the new iMacs), and it’s this falling margin that has impacted Apple’s earnings per share…

EPS in Q2 last year was $12.30; the average of analyst predictions for the same quarter this year is $9.85.

The bad news is that every analyst we’ve surveyed — even the most bullish — believes that for the first time in a decade Apple (AAPL) will report that its income this quarter was lower than the same quarter the year before.

The good news for Apple is that these predictions have already been factored into the current share price.

Judging from the performance of Apple’s shares since early March, the smart money has been pouring back into the company for the past three weeks … Wall Street seems to be betting that in the next six to 12 months, those numbers have nowhere to go but up.

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