Apple Gets Crushed, For No Good Reason

When it comes to Apple [AAPL 83.11 -2.19 (-2.57%) ], help me understand something: JP Morgan PC analyst Mark Moskowitz cuts his outlook for iPhone and Mac shipments microscopically, and it's good for a 5 percent drubbing of Apple shares.

Even as the guy maintains his "overweight" rating on Apple shares.

Welcome to the wonderful world of Wall Street lunacy.

Moskowitz took down his earnings estimates for Apple by a penny — yes $0.01 — to $1.01 a share. His revenue estimate collapsed — kidding! — from $7.72 billion to $7.62 billion. The news gets even more dire — kidding again! — with his Mac estimate collapsing from 2.39 million to 2.19 million. And iPhone unit shipments will plunge — ok, this is getting ridiculous — from 3.8 million to 3.4 million units.

All of that will translate into a lower fiscal 2009 performance for Apple, the analyst argues, with earnings per share declining to $4.73 versus the original $4.82, and revenue now at $32.98 billion against the original $33.97 billion anticipated.

In an economy like this one, to suggest companies are not going to suffer some kind of shortfall is the height of ostrich-ness. Unless your head is buried in some hole somewhere, you recognize as an investor that times are slowing around us, and that no company will be immune from such a tsunamic economic collapse. But to suggest that today's new expectations from JP Morgan are anything less than exceptionally good news risks missing out on what continues to be a horribly oversold stock like Apple.

Apple caters to the higher end of the market, no question. Its Macs carry a premium that customers have been more than happy to pay for decades. And judging by the company's last quarterly report, continued pay. And judging by these new numbers from JP Morgan, will still continue to pay, to the tune of another quarter of well over 2 million Macs sold. Hello? Recession? Depression? You can get a new Dell [DELL 8.04 -0.33 (-3.94%) ] or Hewlett-Packard [HPQ 25.53 -1.45 (-5.37%) ] or Lenovo or some other OldsmoBuick computer for far cheaper. You'd expect massive revisions in Apple's numbers by Wall Street analysts so worried about the macro-economic climate. But that's not what's happening here. Revisions lower are tiny. Customers are trading up and buying new, at least so far as Apple is concerned.

These revisions by JP Morgan are noteworthy if only because they are so very slight. And yet action in Apple's shares is so very dramatic. For no reason other than downward momentum and reactionary traders once again selling first and then not even bothering anymore to ask questions later. Geez, get a clue.

Trends still favor Apple. Along with its cash, its innovation, and what apparently is the consumer's insatiable demand for anything with that little piece of fruit on it. Today's action is overdone.

Apple's oversold.

Again.

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