Writing for IDEAadvisor , Elyssa Jaffe said that investors should be prepared to hear Apple possibly lower its profit expectations even further for the third quarter, which wraps up at the end of the month. Jaffe’s comments come in an article entitled
Don’t be Surprised by an Apple Warning.
Jaffe’s comments go far to demonstrate the difference between how Apple operates and how analysts seem to expect Apple to operate. Maybe I am out of my depth, but it just occurs to me that this mountain ain’t gonna be visiting Mohammed any time soon.
Jaffe noted that Apple’s stock value has slid about 20 percent in the past month, partly due to continued problems in the PC sector. Apple has already previously warned of a 10 percent lower quarterly result than expected, but Jaffe said that the company may not have bottomed out yet.
Jaffe noted that iMac sales are weak, thanks to a slowing US economy, and also said that Power Mac G4 sales won’t carry the quarter, since “no new bells and whistles” have been added since the systems were introduced in January.
The lack of new “bells and whistles” on the Power Mac G4 is pretty consistent for Apple’s product cycle, however — the company rotates attention from pro to consumer machines and back again throughout the year. And since the Power Mac G4’s introduction we’ve also seen a completely new iBook system emerge.
As far as the iMac is concerned, we’re all agreed that it’s a bit long in the tooth. Some industry insiders are expecting Apple to unveil a new iMac line at Macworld Expo, which happens in July — after the end of the quarter, alas, but sure to positively impact the company’s fourth quarter sales.
Jaffe also called Apple “behind its peers” in introducing a portable Web access device and handheld system, two market sectors Apple has expressed absolutely no interest in publicly. Many Mac enthusiasts would love to see an Apple-branded PDA — after all, Apple’s long-defunct Newton MessagePad blazed trails that Palm later followed — but so far Apple seems content to focus on its core competencies: The creation of full-featured computers and development of its operating system.
Jaffe totally fails to acknowledge the hot demand of Apple’s portable systems. The PowerBook G4 was introduced in January and had strong sales, and the recently redesigned iBook has been a hot seller since its introduction early last month. Jaffe also disregards Mac OS X’s affect on Apple’s bottom line, either positive or negative.
Apple is well-known for staying tight-lipped in between its periodic product introductions, corporate announcements, and quarterly earnings reports, but here too Jaffe finds fault — this time directed at Apple’s recently announced retail store channel.
“Nothing has been said regarding the performance of the stores other than the opening weekend of the first two,” said Jaffe.
Jaffe claims that this has led to investor unease about Apple’s retail plans, which she intimates “have not panned out as expected.” Investors and analysts totally unfamiliar with Apple may not be comfortable with the completely characteristic silence, but for the rest of us, it’s business as usual in Cupertino.
Apple’s recalcitrance at trumpeting its retail stores’ results past the opening weekend certainly shouldn’t be taken by anyone as an indication of success or failure. I was told by Apple’s retail stores spokesperson that it was highly unlikely the company would make any further statements about the stores’ financial results until its next quarterly earnings report.
IDEAadvisor’s technical desk notes that Apple didn’t live up to its target price earlier this year of $28.25 — IDEAadvisor said that “the bias is leading” towards another stock drop to about $18 a share (it’s trading around $20 right now), but that if it got over $22, it “would be a positive sign.”
Jaffe said that despite the potential for bad news, IDEAadvisor doesn’t anticipate changing its “Neutral” rating on Apple’s stock.