G5 Worries Making Analysts Less Than Bullish On AAPL

March 16th, 2004 at 2:00 PM - Apple Stock Watch by Bryan Chaffin

Appleis stock price is the highest it has been since the tech bust of 1999. Yesterday, AAPL closed at 25.82, down by 0.63 (-2.38%) on strong volume of 10,812,204 shares trading hands. CBS Marketwatch, however, is reporting that some Wall Street analysts are less than bullish on Apple, largely due to worries about what they consider disappointing G5 sales. The media outlet quotes two analysts, Keith Bachman of Banc of America Securities, and long time Apple watcher Steve Fortuna of Prudential Equity Group, as saying that G5 worries are more important than the success of the iPod. From CBS Marketwatch:

We believe [G5 sales are] the single-best gauge of the growth potential of Apple," [Keith] Bachman said in a research note. "The G5 is more important that the iPod in terms of [profit] impact."

Bachman estimated that for every 5 percent change in G5 sales, Apple sees a 4-cents-a-share effect on its bottom line. But a move of the same magnitude in sales of the popular iPod player affects Appleis earnings by just 2 cents a share, he says.

While Appleis iPod sales remain strong -- the company sold 730,000 iPods in its last quarter and had pre-release orders for 100,000 iPod mini music players -- Bachman said the companyis G5 sales could turn out to be disappointing for the second quarter in a row.

[...]

[Steve] Fortuna wrote in a research report that recent Apple investors have been "lured by the success of the iPod and iTunes" and that their enthusiasm has driven the stockis recent performance.

"The music and retail initiatives have certainly been a positive in terms of driving increased traffic and some switchers to the brand," Fortuna said. "But we remain cautious about the current environment as we tread through the seasonally weaker first half [of the year]."

Thereis more information in the full article, which we recommend as an interesting read.

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