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September 21st, 1999

[Updated 5:15 PM] Analysts Flock To Confirm Apple As A "Buy," Apple Featured In CNBC's "The Edge"

In a somewhat surprising move, Apple analysts flocked to reassert their confidence in the company. Analysts from Warburg Dillon Read, BancBoston Robertson Stephens, and Advest Inc. all referred today's fall in Apple's stock as buying opportunities. According to CBS Marketwatch:

BB Robertson Stephens estimates 15% morning sell-off, could create buying opportunity; reiterates buy

Warburg Dillon Read keeps buy, $90 target; says any pullback a buying opportunity, sees plenty of demand for Mac

And according to a report from Reuters:

"We would see a pullback in Apple's share price as a buying opportunity," said Charlie Wolf, an analyst with Warburg Dillon Read.

"Today's a buying opportunity, especially for Apple," said Jack Shaughnessy, chief investment strategist at Advest Inc. "They're just paying the price because their supplier couldn't meet their need."

Analysts and reporters on CNBC also repeatedly reported and commented on Apple as a strong company and the stock as a buy.

Also, CNBC's The Edge will be featuring a report on Apple. The teasers have asked whether consumer loyalty will offset the bite that Wall Street took out of Apple today. The Edge is a financial show that will be aired at 5:00 PM CDT, on CNBC.

[Update 5:15 PM]

The report on Apple has aired since we first posted this article. The Edge interviewed several analysts who once again reiterated the fact that Apple is still in great shape while touching on the issues surrounding the G4 shortage. They also reiterated that there have been no downgrades on Apple's stock, though BancBoston Robertson Stephens and Warburg Dillon Read both lowered their earnings estimates on Apple to fall in line with the earnings warning from Apple.

One interesting note is that the reporter interviewed one analyst who suggested that this incident would likely put pressure on Apple to secure a second source for their PowerPC needs, which means IBM. IBM is not currently making a G4 with AltiVec (or The Velocity Engine as Apple has renamed it) though they have stated they may reconsider this decision. Another analyst was somewhat negative on this citing Apple's low worldwide market share of only 4.5% as a disincentive for IBM to want to get into the game. Specifically: "There just isn't enough for them to care about." This is probably true, though there are many other contributing factors that could entice IBM to be interested in producing a G4.

The report closed by saying the effect on Apple's stock may be temporary, so long as Apple can continue to provide products that Mac users and new users are attracted to.

The Mac Observer Spin: Once again a very favorable report on Apple from the financial community has aired in the midst of a 12% decline in Apple's stock price. These times, they are a changin'.

For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.

The Mac Observer Spin: The real story here is how Apple was referred to as "sector leader," an "industry leader," and other generally positive terms. The overall mood throughout the day and throughout the financial industry was utterly different than what we were finding even 2 or 3 months ago. In today's reporting, Apple was a strong company and a leader who had faced a momentary stumbling block that really wasn't their fault anyway. The blame was largely placed at the feet of Motorola and the normal problems associated with any new product ramp-up. This is symptomatic of a fundamental shift in the way that at least the financial professionals think about Apple. At times, it even seemed as if some of the reports were defending Apple, an unbelievable turn of events that is remarkably gratifying to witness.

In the meanwhile, Apple will still turn a profit for the 4th quarter and likely faces a stellar 1st quarter as pent up demand begins to be filled. Don't forget about the new iMac too. Financial results for the next quarter should be positive indeed.


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