AI
Friday, July 02, 2004 10:29:25 AM
No M L apologia 
Lower estimates = Buy
Highlights:
• We are reducing our estimates for the September
quarter because Apple is delaying its next-generation
iMac until September. The company is not shipping
the current product, which will reduce sales. We
reiterate our Buy rating and $39 price target.
• The June quarter should be unaffected. We have cut
our iMac unit estimate for the September quarter by
half from 210,000 to 105,000 since most of back-toschool
will be missed. Although it’s possible that
upside in iPod or substitute iBook or eMac sales could
make up some of the difference, our F4Q revenue
estimate goes from $2.07 billion to $1.95 billion while
EPS drops from $0.18 to $0.16.
• F2004 estimates drop from $7.9 billion and $0.63 to
$7.8 billion and $0.61. We have not changed our
F2005 estimates of $9.0 billion and $0.82.
• We had expected a new iMac last week; now it’s
clearer why we didn’t see one. Apple did not explain
the problem but stressed that announcing a delay of an
unannounced product was highly unusual and that
more information would be forthcoming on its July 14
earnings call.
• This bungled product transition gives credence to the
bears’ concerns about Apple’s execution and will take
some wind out of the stock’s sails. Still, we don’t
think the fundamental story changes (and at least we
know a new iMac is coming). Apple needs to show
that it gain at least marginal PC share and achieve
management’s goal of 15% revenue growth the next
few years.
Lower estimates = Buy
Highlights:
• We are reducing our estimates for the September
quarter because Apple is delaying its next-generation
iMac until September. The company is not shipping
the current product, which will reduce sales. We
reiterate our Buy rating and $39 price target.
• The June quarter should be unaffected. We have cut
our iMac unit estimate for the September quarter by
half from 210,000 to 105,000 since most of back-toschool
will be missed. Although it’s possible that
upside in iPod or substitute iBook or eMac sales could
make up some of the difference, our F4Q revenue
estimate goes from $2.07 billion to $1.95 billion while
EPS drops from $0.18 to $0.16.
• F2004 estimates drop from $7.9 billion and $0.63 to
$7.8 billion and $0.61. We have not changed our
F2005 estimates of $9.0 billion and $0.82.
• We had expected a new iMac last week; now it’s
clearer why we didn’t see one. Apple did not explain
the problem but stressed that announcing a delay of an
unannounced product was highly unusual and that
more information would be forthcoming on its July 14
earnings call.
• This bungled product transition gives credence to the
bears’ concerns about Apple’s execution and will take
some wind out of the stock’s sails. Still, we don’t
think the fundamental story changes (and at least we
know a new iMac is coming). Apple needs to show
that it gain at least marginal PC share and achieve
management’s goal of 15% revenue growth the next
few years.
