Apple Falls After JPMorgan Cuts Mac, IPhone Estimates

Apple Inc. fell 4 percent on the Nasdaq Stock Market after JPMorgan Chase & Co. cut its estimates for iPhone and Macintosh-computer sales, citing a worsening economic slowdown.

Apple will probably ship 2.19 million Macs in the first three months of this year, down from a previous estimate of 2.39 million, analyst Mark Moskowitz said today in a note. He reduced his forecast for iPhone sales to 3.41 million from 3.82 million.

Mounting job losses, falling house prices and tighter credit are making consumers less likely to purchase electronics, Moskowitz said. Consumers account for 70 percent to 75 percent of Apple’s sales, he said. For the year ending in September, Moskowitz said Apple will earn $4.73 a share, down from his previous prediction of $4.82 a share.

“The next few quarters stand to get bumpy,” Moskowitz said. While consumer spending had held up in previous recessions, the current slowdown is “quite more challenging.”

Apple, based in Cupertino, California, fell $3.54 to $85.30 at 4 p.m. New York time. The stock has declined 29 percent in the past 12 months.

While slowing demand will hurt the company’s revenue, a fall in component prices will reduce costs, enabling Apple to maintain profit margins, Moskowitz said. Competitors such as Dell Inc. are being forced to reinvest declining component prices to maintain their market share, he said.

Price Target

Moskowitz, who has an “overweight” rating on Apple’s shares, cut his price target to $100 from $102.

The U.S. unemployment rate jumped in February to 8.1 percent, the highest level in more than a quarter century, the Labor Department said today in Washington. Employers eliminated 651,000 jobs last month.

Higher jobless rates and corporate spending cuts will weigh on computer sales. Industrywide personal-computer sales may drop 12 percent this year, the most ever, according to researcher Gartner Inc. Research firm IDC predicts a drop of 4.5 percent.

This week, Apple updated its desktop models for consumers, adding more powerful graphics and lowering prices on some machines. The company added a 24-inch (61-centimeter) iMac with twice the memory and storage of the previous generation 20-inch iMac, for the same price. The company also cut the price of the Pro, its most powerful desktop machine, by $300 to $2,499, while more than doubling memory and improving processing speed.

New Features

“The company could partially offset the weakening demand environment for desktop PCs with potential buzz around new features and price points,” Moskowitz said today.

Even as demand slows, Apple’s sales will outperform those at competitors Hewlett-Packard Co. and Dell. Apple’s sales will probably increase 8 percent this fiscal year, according to the average analyst estimate in a Bloomberg survey. Sales at Hewlett-Packard and Dell will drop, analysts project.