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Apple Inc (AAPL) Gets Forecast Cut Despite iPhone 5 Fever

Apple Inc (NASDAQ:AAPL) LogoApple Inc (NASDAQ:AAPL), despite seeing lines of iPhone 5 customers wrapped around the block in retail stores across five countries over the weekend and shattering previous opening-weekend sales records, the company’s stock has actually taken a downward trend over the last week. While the company managed to sell five million iPhone 5 devices over the weekend, that actually led to the company – to steal a football analogy – out-kicking its coverage. While the company is reveling in great sales, it was having some problems in the supply chain where production of the devices were not keeping up with the demand.

That lack of production – which could be partly blamed on the extreme demand but has also been blamed on problems within the supply chain itself in producing the necessary components – has affected Apple Inc (NASDAQ:AAPL) in the views of analysts and perhaps investors as well, including billionaire fund manager David Tepper of Appaloosa Management LP – who had invested $301 million in Apple Inc (NASDAQ:AAPL) as of the end of June.

UBS analyst Steve Milunovich came out in a research note this week and toned down his forecasts on revenue and earnings for the quarter and the full fiscal year for Apple Inc. (NASDAQ:AAPL). In his new forecast, Milunovich wrote that he was lowering his quarterly forecast of $49.3 billion in revenue and $13.65 earnings per share, compared to a previous projection of $53 billion and just more than $15 EPS.

For the fiscal year, Milunovich predicts that Apple Inc. (NASDAQ:AAPL) would record an EPS of $52.51, which was down from his prior prediction of $53.76 and below the Street consensus of $53.32. He cited supply-chain problems with the in-cell displays that caused him to downgrade his sales forecast for the December quarter from 44 million units to 38 million. “This shortfall mostly appears to be a timing issue though we assume some lost sales in an effort to be conservative,” Milunovich wrote in his research note Thursday.

However, “We do not read the maps glitch and potential near-term shipment disappointment as a material change in the long-term story,” he wrote. “In our view, stock gains may not come as easily, but there are few tech franchises with Apple’s return on invested capital and growth at 11x enterprise value/free cast flow.”

Disclosure: No positions in Apple Inc. (NASDAQ:AAPL)

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