Apple Inc (AAPL)

[fmikehugo]

07:49 AAPL Apple Computer: Estimates raised due to potential profitability of music biz -- JP Morgan (55.24 )

JP Morgan out on Apple Computer saying they believe the potential profitability of Apple's music business is highly dependent on whether or not the company can maintain its dominance in the portable music player market and avoid profit compression from commoditization. In firm's opinion, Apple can do this by maintaining its current "closed system" approach for the iPod and iTMS. As a result of firm's increasing confidence in Apple's digital music business, they are raising estimates. For the DecQ, they now expect revenues of $3.09B and EPS of $0.44 from $2.89B and $0.41 (consensus $2.9 bln/$0.42). For fiscal 2006 the firm forecasts revenues of $13.11B and EPS of $1.91 up from prior $11.58B and $1.53 (consensus $11.85 bln/$1.54). Maintains Overweight rating.