JP Morgan cuts Apple FY 2008 share estimate to from $3.93 to $3.33 per share

Apple Store“J.P. Morgan Securities cut its fiscal 2008 earnings estimates for Apple Inc., citing the company’s plan to account for iPhone revenues and profits as subscription over a 24-month period,” Reuters reports.

Reuters reports, “The brokerage kept its ‘neutral’ rating on the stock, adding that at the current share price, risk versus reward for Apple remains unfavorable.”

“J.P. Morgan cut its 2008 earnings estimates for Apple to $3.33 a share from $3.93 a share, and revenue forecast to $28.25 billion from $32.33 billion,” Reuters reports.

Reuters reports, “J.P. Morgan said it maintained its rating as while Apple’s latest quarterly results ‘significantly exceeded’ expectations, risks such as hiccups with the iPhone’s initial launch, more limited Mac share gain potential, and reduced leverage from flash price declines remain.”

Full article here.

[Thanks to MacDailyNews Readers “Fred Mertz” and “LinuxGuy and Mac Prodigal Son” for the heads up.]

14 Comments

  1. No matter how well Apple does some analyst firm looks at spectacular numbers and sees the black lining on a silver cloud. Fine JP Morgan, just more AAPL for me to buy. Like last year when I bought a bunch at $56 while all the analyst were running scared and crying doom and gloom. I would personally like to thank them for driving the stock prices down, so long term investors like me can grab some on the cheap.

  2. Looks like JP wants to play games with AAPLs current stock price, pushing it down in order to purchase more for themselves, while telling others “stay away.”

    1. “…more limited Mac share gain…” What?! Does JP show any proof of this in any sort of grounded research or polling data? Of course not, just FUD to push the price down.

    2. JP does not mention anything regarding new product entries, new iPod models, nothing about future markets or world-wide growth that is occuring… Nice one JP.

    Can someone take these guys to the DOJ whoopin’ shed please?

  3. The analyst at JP Morgan should be fired, as he obviously overlooked the fact that the subscription revenue recognition only affects revenue and income by spreading this out over the subscription term. This has no effect on cash flows.

    As one of my corp. finance professors made clear, CASH FLOWS RUN THE BUSINESS!!!!!!

    You can play a lot of games with revenue recognition and the income statement, but you can’t fudge cash flows.

    The only issue is that some investors who don’t do their homework will look at the financials and think that the P/E multiple is “high”.

    By the way, the “subscription” revenue model is why Microsoft was always so highly valued. They account for a lot of their software licensing revenu this way, which smoothed out their earinings between product releases.

  4. JPM doesn’t see the overall big picture of serious market share being gained and what that adds to the top and bottom line. I believe the ipod is bringing up an entire generation of people who will buy Macs once they get out of high school/college and join the work force.

  5. The amazing thing is that we just finished a quarter where despite NO new Mac hardware, Mac sales were still up 36% YOY. How these idiots at JP Morgan can’t see what kind of TREND is being set here is beyond me. They’re absolutely clueless.

  6. What gives? Apple will likely post EPS of 3.20 for FY 07. Is it really likely that they will earn less given that iPhone, AppleTV and Leopard will be fully ramped up in FY08 plus Macs and Pods will still be increasing in sales.

    I agree with the sentiments above, JP are looking to deflate the stock to jump in again. They probably already sold stock after today’s jump in price.

  7. who cares what JPM says,
    if it goes up we’ll all make money, if it goes down we can buy more!!
    Apple is the only stock that I do not care about the price in the short term. See you in 2008 at 200/share

  8. FOLLOW THE CASH. dumb reason to lower earnings because they will amortize revenues – still get the cash upfront. i think it is SO smart to provide free upgrades to iPhone and do it in Apple’s usual it-just-works way. Try that with a windows mobile device…

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