Slightly Raising Apple Estimates Following 3G iPhone Launch; Reiterate Market Perform

7/14 - "Based on trends during the quarter, we have revised our estimates to reflect the new iPhone business model and our analysis of recent component price trends, with EPS estimates about the same and FCF estimates significantly higher...The iPhone 3G launch was clearly not as smooth as last year's launch owing mostly to the simultaneous launch of 2.0 software and a more cumbersome activation process. However, demand was clearly strong across the U.S., with lines persisting at the Apple store in Nashville at least through Saturday night...For 2008E/2009E our EPS estimates go to $5.19/$6.26 from $5.15/$6.27. Our FCF/Share estimates for 2008E/2009E are now $7.56 and $9.43/share."

"While MacBook growth is likely to remain very strong and may even accelerate in Q4 with a potential product refresh, overall gross margins are likely to be down significantly Y/Y due to...