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Wall Street Mixed on Apple, Worries About G5 Delays

By Blane Warrene MacNewsWorld ECT News Network
Aug 18, 2004 11:59 AM PT

A flurry of ratings for Apple were released overnight and this morning by Wall Street firms, among them Credit Suisse First Boston, UBS and Piper Jaffray.

Wall Street Mixed on Apple, Worries About G5 Delays

The ratings were for outperform, neutral and buy -- showing a lack of concurrence on outlook for the Macintosh computer maker. Apple's stock closed at US$30.87 on Tuesday and this morning was trading up a few percent around 31.54, about 9 percent off of its 52-week high of 34.19, achieved on June 28.

Apple has a current market capitalization of more than $11 billion and is suggested to have several billion dollars in cash on hand.

Supply and Demand

Analyst concerns about Apple include market saturation, an issue shared among PC makers who now depend on computer-replacement cycles for profit growth. Analysts also expressed concern about a nagging supply and demand imbalance for G5 PowerPC processors.

UBS analysts suggested concern about continued lagging production by IBM of the G5 processor could linger into early 2005, and if a forthcoming G5 iMac is widely adopted, buyers could experience inventory shortages.

In its most recent filling with the Securities and Exchange Commission (10-Q filed 8-5-04), Apple was very public in discussing restraints on its computer sales due to IBM supply-chain problems, writing, "Although Power Macintosh sales have increased from the prior year, sales of this product were constrained in the fourth quarter of fiscal 2004 due to manufacturing problems at IBM, sole supplier of the G5 processor."

Closed Mouth on Issues

Representatives of Apple and IBM did not respond to requests for comment.

Also, industry analysts familiar with Apple appeared to be following an Apple tradition, having little to say for the record on the issue.

Still, one Cupertino-watcher said he believes that new G5 iMacs could positively impact Apple financially, especially if they break new design molds.

Unconfirmed reports have surfaced in the Macintosh community that the new G5 iMac might be a totally new "headless" design, with PC hardware integrated into a flat panel display, doing away with the current goose neck models.

New Music Portfolio

Most analysts say Apple's newfound market leadership in digital music shores up any potential slip in desktop sales. The iPod and iTunes Music store showed surges in unit sales and profitability in its most recent financial reporting.

With Apple showing increased sales in successive quarters across a majority of its product line, excepting existing iMacs (no longer being produced), the company might not be especially concerned about today's ratings.

For now, early adopters salivating for a new G5 iMac will have to wait to see if production issues are resolved in time for an expected release in conjunction with Apple Expo Paris at the end of this month.

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