July 2, 2004 12:33 PM PDT
iMac delay bites into Apple stock
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Late Thursday, Apple issued a statement saying it had stopped taking orders for the current iMac and that the replacement model, which the company had hoped to have on shelves within a few weeks, would not arrive until September.
The resulting gap, which could hurt Apple during the back-to-school buying period, sent shares lower in after-hours trading on Thursday, a dip that continued into regular trading Friday. Shares have rebounded somewhat, however, and were trading recently at $31.00, down $1.30, or 4 percent, from yesterday's close.
Apple shares had been trading at multiyear highs in recent weeks. The shares began trading down on Monday when CEO Steve Jobs did not introduce a new iMac at the company's Worldwide Developer Conference in San Francisco, as some people had expected. Jobs' keynote speeches often feature the first mention of new products.
Some analysts came to Apple's defense on Friday, saying the dip in shares makes it a good time to buy the Cupertino, Calif., company's stock.
"First, it's a supply, not a demand, issue," Needham analyst Charles Wolf said in a research note. "What's important is that the new model will be available for the Christmas selling season. This would be a nonevent if Apple had not stopped production of its current iMac."
The key for Apple, Wolf said, is making sure the new iMac is cheaper than its predecessor, which has consistently sold for more than $1,200.
"Apple must drive the entry-level iMac price below $1,000, from $1,200 currently, if it hopes to capture Windows users who have bought an iPod and are now considering the purchase of a Mac," he said.
Wolf said that the gap between old iMac and new could cost Apple about 5 cents per share in earnings for the September quarter: "We had estimated that Apple would sell about 150,000 iMacs in the September quarter. Worst case, this number could fall to 50,000."
Apple has said that the iMac issue would not affect sales for the just-ended quarter, but the company has refused to say what impact it will have on the quarter that runs through the end of September. The company is slated to release earnings for the June-ending quarter on July 14.
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ever ****-ups, but one of the biggest ****-ups in corporate
history. For a company of this magnitude to get it's forecasts so
dramatically wrong is unbelievable and their stock deserves to
be smacked hard for it.