Analyst: Here’s Apple’s Main Problem

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“Less than one year later we are again facing what we expect will be another Apple earnings beat, this time driven by the iPhone 5 launch. And yet we remain hesitant to upgrade the stock given the uncertainty over margins, the impacts of a compressed product cycle, and a March earnings report which might deliver Apple’s first decline in EPS in the past decade.”

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 Piecyk cut Apple’s earnings per share estimate for the December quarter from $15.65 to $14 despite raising his revenue estimate by $2.2 billion to $56.2 billion. He also maintained full-year concerns. The analyst’s iPhone unit sales estimate for the last quarter went up to 50.5 million from 47.5 million, but full-year estimate dropped to 158 million from 160 million. In addition, he cut gross-margin estimate for last quarter to 38.5 percent from 44.5 percent and for the full year to 40.2 percent from 43.4 percent. He also cut his full-year earnings per share estimate to $46 per share in profit from $50 on those margin concerns.

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