Thursday, April 12, 2007

Calls of Note Part 4

JP Morgan commenting Apple (NASDAQ:AAPL), raising March quarter estimates ahead of Apple's earnings release, and also revising their longer-term assumptions for the iPhone.

Firm raises March quarter EPS estimate to $0.66 on revenues of $5.23 billion. They are raising iPod unit estimate to 10.34 million from 9.76 million, as well as their margin estimates to reflect the impact of flash price declines on iPod gross margins. Firm is also lowering their estimate for Mac shipments to 1.48 million versus 1.51 million previously.

Macs could show some improvement with CS3. For the June quarter, firm believes that Mac shipments should benefit from the launch of Creative Suite 3 from Adobe, but this is already factored into their numbers.

Firm is refining their overly optimistic iPhone pricing assumptions. They had assumed that the previously announced retail prices for the iPhone included a subsidy from Cingular, which they now believe is incorrect. In addition, they are now assuming more aggressive ASP declines in 2008.

Notablecalls: I was hoping to see gap up on the headline of raised estimates to call it a fading oppty. Didn't happen as stock is trading 30-40c below yesterdays close. I believe there is additional downside for the stock today given Mac shipments estimate reduction and more cautious view on iPhone by JP Morgan.

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