Apple shares take hit over Power Mac G5 ‘weak sales’ concern

“The love-hate relationship that investors have always had with Apple Computer now has analysts taking a more cautious stance at a time when the company’s stock revisited levels not seen in nearly four years,” Rex Crum reports for CBS.MarketWatch.com.

“The latest take on prospects for the Cupertino, Calif.-based company came Tuesday from Banc of America Securities analyst Keith Bachman, who said he thinks the run of good luck that Apple has enjoyed this month could be over because it was mostly due to sales of the iPod digital music player,” Crum reports. “Between March 1 and March 12, Apple’s shares climbed 15 percent, to $27.56. The last time the stock was in that range was in August 2000. But the stock has pulled back in recent sessions and traded recently at $25.79, down 2.5 percent.”

“While much of the tech sector has also been in retreat of late, Bachman said Apple’s shares might well have reached the upper limit of their valuation for the time being due to weak sales of G5 PowerMac computers,” Crum reports. “For its fiscal first quarter ended Dec. 27, Apple shipped 206,000 G5 computers, short of many analysts’ estimates. Bachman estimates that Apple will ship 195,000 G5 PowerMacs in its current quarter.”

“Apple’s iTunes has even come up against some resistance, although its sales numbers would be the envy of anyone company playing in the online music market,” Crum reports. “It might… be difficult, if not impossible, for Apple to catch up with its own goals of selling 100 million songs by the first iTunes anniversary on April 28. Jobs said 2.5 million songs are being downloaded every week, and at that rate, iTunes would reach about 68 million songs by the time the service hits the one-year mark.”

Full article here.

AAPL shares are trading at $25.70, down 0.75 as of the posting of this article. AAPL quote here.

42 Comments

  1. Apple is almost always undervalued. Investors just don’t know what Apple does for a living sometimes. Money types are always giving Apple “advise” that they cannot do because it has nothing to do with their business. Isn’t 5 billion in the bank, almost 200,000 high end G5’s sold in a quarter and being one of the two profitable computer companies enough for these people.

  2. “For its fiscal first quarter ended Dec. 27, Apple shipped 206,000 G5 computers, short of many analysts’ estimates. Bachman estimates that Apple will ship 195,000 G5 PowerMacs in its current quarter.”

    well duhhh… imagine that, sales will probably go down in the last quarter before a product revision. But lo and behold, what do you think will happen once they release dual 2.5Ghz G5’s…

    I’ll go out on a limb and be the analyst that predicts sales will go down in the quarter that precede the relase of 3Ghz G5’s.

    tards.. all of em

  3. Apple should be counting the Pepsi promotion when it announces the sales rate because it will count the total promotion as part of sales when it is all done. In the meantime people are extrapolating from an Apple-released sales rate which is not a complete representation of what is happening and coming to the wrong conclusion. It is Apple’s fault; they can’t say they will count Pepsi stuff toward the total and then not count it in the rate to get to that total. They are shooting themselves in the foot, ankle, … excelsior! (originally from NY).

  4. remember, investors believe is $ god, they don’t give a shit about quality as long as the product sells well.
    They expect Apple to be a company like Dell, selling crap for peanuts.
    They don’t seem to get it that only creative thoughts survive.

  5. Duh. Investors aren’t public charities nor do they think of themselves as patrons of the arts. If they want to donate to a museum they’ll donate to a museum, not buy stock in a computer company. The only concern an investor has is, “If I buy $X of stock today, what will it be worth in the future.”

    iMac sales are sinking, and Apple’s given no indication as when or how the product line will be changed to improved sales. G5 sales are flat, and Apple’s been delayed in releasing the next set of models. Of course whether they are delayed or not is guesswork, because Apple has given no indication, other than rumors, as to when the next models will be out or what the specs will be.

    Powerbooks are doing okay, but are held back by buyers reluctant to sink more money into the G4. Hell, I’m one of those people. 12″ Powerbook is $1,999. My tax refund is $2,005. Seems like a match made in heaven, except I’m not spending $2,000 on a six month old model using a 1 GHz G4. Screw that. I’d set that money aside, except that Apple’s given no indication when the followup models will be released or what their specs will be.

    Apple’s secretiveness is not investor friendly, and not giving a roadmap as to where the product lines are going leaves investors with no way to estimate what their $X will be worth down the line. Sitting on flat or dipping product lines like the iMac with no sign help is in sight doesn’t do much for investors either.

    Their will now follow the usual explanation that Apple doesn’t aim at stock growth, but instead on maintaining its profits.

    Fine. But if that is the case then stop whining about negative comments from investors. Apple is a publicly traded company lives under the same rules as everyone else.

  6. I agree Boeing777, but unfortunately, it’s usually easier to sell a Yugo than a Lexus…

    It’s all about VALUE. Buy a piece of crap and don’t whine to me about your ‘bad luck’

  7. I bought a new G5 last Friday. In the last year I have purchased a new G3 iBook, G4 iBook, eMac, 1.8 G5, 17″ Studio Display, .Mac, AppleCare (x4), iSight, iLife, Garage Band, mini iPod, AirPort Extreme Base, 4 AirPort Cards (3 AP Ext, 1 AP), the Panther upgrade and other software & hardware. Add to that $350-400 worth of iTunes Gift Cards/Certificates for myself and about another $500 worth as gifts. I’ve done my part.

  8. Apple will be announcing the Pepsi downloads in the total at the end of April. SJ should never had made a prediction as he did. It was stupid. You cannot project these things and I’m sure his marketing people were very upset about it. Apple doesn’t comment on future products and they shouldn’t have said anything about where they thought sales (downloads) would be for iTMS. Apple is not undervalued. Desktop sales industry-wide are not as robust as in the past. Believe it or not, the computer industry is no longer growing in double digits. Today the name of the game in computers is price points. Dell continues to dominate because of that. Because a larger percentage of buyers now use their computers for internet browsing, email and word-processing, most low-end computers now do that reasonably well. I love my 17″ iMac but it is still too expensive in perception by the general public. Apple continues to do a lousy job of getting the word out about overall value. Blame on their too long association with Chiat-Day. Few companies stay that long with the same ad agency. They usually move on to get the benefit of new blood and ideas that a change would bring. Apple will never be dominate in the industry. It ‘s too late for that. They lost the war a long time ago. They can win battles – such as the iPod, but have to make sure they don’t rest on their laurels and get smug about it. iTMS will eventually see it’s percentage of downloads diminish. I wish SJ would keep his mouth shut and not proclaim that no one will catch up. Apple saw that happen before. History does repeat itself. Rant over. (Happy 78th birthday Jerry!)

  9. Well put OJ.

    The entire market is in pullback mode. Greenspan has recently said that the crushing debt, both personally and in govenment, is not a problem and I think that has confused investors. On the one hand it would be nice if true, on the other it sounds as if he has given up trying to affect the situation. Bachman’s comments about G5’s seem to correlate with apple’s pullback over the last few days, but it would have been more impressive to anticipate the pullback given that info. He is a talking head with a potfull of “reasons” for any price action…..after the fact.

    All that being said, why is it so quiet on the new product front? Amd and Intel wear themselves out anticipating new chips, and release dates, and I am not saying that is the way to do it. But it would be nice to have a small bone that is not 3rd party rumor once in a while.

  10. Opinionated Jerk is right–these are FINANCIAL analysts, so of course their task is to care only about financial performance. I don’t think we should get too down about all this, pkradd. Apple still has plenty of opportunity if they (i.e., IBM) can ever get the new G5 chip out and refresh/upgrade the entire Apple computer line accordingly. The ongoing viruses and other internet security debacle on the Windows side shows NO sign of getting better any time soon. Oh, and they sure do need new/better commercials, but the time for that investment is when the new line is out and they have something hot to sell. My 2 cents…

  11. The second quarter is historically Apple weakest e.g lower sales. To predict that sales of PowerMacs will be less than last quarter is like predicting the sun will come up tomorrow morning.

    This is financial analyst headline grabbing.

  12. pkradd, you as well as the rest of the journalistic world is taking Steve Jobs out of context in regards to iTunes.

    Click here to read what he said, or click <a href-“http://www.apple.com/quicktime/qtv/musicevent03/” >here</a> to see it again.

    And about the rest of Apple, Apple Computer, Inc. is a computer company, not a personal lifestyles devices company. So, if the bread and butter of the company is not selling, then an investor has a right to be concerned about his/her investmenta and the future growth of the company.

    Just my two cents.

  13. With the Pepsi promotion going I’ve been buying more Pepsi and getting my songs that way, rather than buying them at ITMS with cash.

    In terms of the G5, perhaps laptops are eating into sales of G5’s…
    If you are buying Apple It’s either an iMac or a G5.. I guess they still make G4’s but threy are not considered ‘cool’, which is the point of this post. So if you are above general consumer levels you will then choose between the G5 tower or a laptop, and a lot of people think that the power of a high end laptop is powerful enough.

    So.

    I think a lot of people in the past ‘overbought’ when they got a pro tower, but now a powerbook is just right for power, portability, and coolness.

    By coolness, I mean that a status-happy executive, or a techie that wouldn’t be caught DEAD with an iMac.

    How are the laptop sales doing?

    Does anyone else think that this theory is valid? I have executive friends who used to buy the most powerful tower Apple made because they wanted the biggest and best. They weren’t rendering After Effects projects. Just surfing and word processing. Total overkill. And at the time the laptops were pricey -and- weak by comparison.
    Now the laptops are powerful, portable, take up a lot less room, are not NOISY, are considered chic, and the prices seem right. So people are buying laptops in droves. For themselves and for their spouses. They haven’t bought a tower in years.

    I think that this might explain weak sales of G5’s.

    Does this make sense

    DV

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