Analyst Rates Apple 'Hold,' Says Intel Transition 'Not Without Risk'

American Technology Research analyst Shaw Wu issued a Monday morning research report that addresses the ever-building rumors that Apple CEO Steve Jobs will use his WWDC keynote to announce a switch to Intel processors. He assesses the stock as "Hold," believing that itis fairly valued, and writes: "We believe using Intel x86 is technically feasible but could be challenging from a marketing perspective as AAPL has promoted aggressively over the past 10+ years how PowerPC and its Mac OS are superior to Wintel. We believe AAPL could risk alienating some of its loyal customer base and may cause a freeze in Mac purchasing as users evaluate this potential platform change."

Mr. Shaw goes on to say that the "more likely scenario is support of both PowerPC and x86." He doesnit expect "a material cost advantage in using x86 over PowerPC" and notes that "processor and architecture changes are not without transition risks," citing Appleis moves from the Apple II to the Mac in the mid-1980s and its switch from the 68000 processor series to the PowerPC in the mid-1990s as ones that cost the company customers while "others took years to convince to upgrade. One thing the Wintel camp has done right ... is its relatively smooth platform transitions without any major changes to its architecture. Perhaps a move to x86 will be smoother, but we do not think it will be without risks."

Mr. Shawis other expectations for Mr. Jobsi Monday morning keynote involve an announcement of "development and support of new dual-core G5 and G4 processors from IBM and Freescale, respectively, and upping Mac mini standard memory to 512MB from 256MB."