Analysts Offer Mixed Opinions After Meeting With Apple

Some think the future looks sweet, but others apparently don't.

Bear Stearns took a slice off its third-quarter and full-year 2001 earnings projections for Apple(AAPL) this morning, a day after the PC maker's meeting with analysts at its Cupertino, Calif., headquarters, amid concerns related to the launch of the company's new operating system.

Shares of Apple lately slipped 88 cents, or 4.1%, to $20.81 in morning trading on the Nasdaq, far from its 52-week high of $75.19.

This morning, Bear analyst Andrew Neff cut his third-quarter earnings estimate to "around breakeven" from 12 cents a share, compared with 45 cents a share in the same period last year. He also slashed his 2001 forecast, and now expects the company to lose 27 cents to 48 cents a share, compared with earnings of $1.69 a share in 2000. According to First Call/Thomson Financial, 14 analysts expect Apple to earn 17 cents a share in the third quarter, while 15 analysts projected a loss of 26 cents a share for 2001.

In his report, Neff said he was "concerned that Apple's near-term prospects could fall below expectations in the June quarter in the face of a potential pause by customers," and said the issue was whether customers would wait three months to get the "highly anticipated Mac OS X."

Prudential Securities analyst Kimberly Alexy saw a different picture. She raised Apple's price target to $26 from $21, calling the stock "attractively valued." She said the company's new product launches should drive the company to profitability in its March quarter, the company's fiscal second quarter.

She also mentioned the surplus of components, which would result in lower prices, and said the fundamentals of the computer industry are improving as inventories are moving toward normalized levels and prices are stabilizing.

UBS Warburg also threw in an encouraging note commenting on Apple's meeting, saying "it does not appear that Apple will need much help from the economy to achieve minimal profitability for their March quarter" given its "higher gross margins and lower operating expenses." UBS expects second-quarter earnings of 3 cents a share, compared with earnings of 44 cents in the same period last year.

UBS, which maintained its hold rating on Apple, also said the company "benefits from a scarce supply of the new PowerMacs and Titanium notebooks enabling them to carry a backlog for the next two quarters," and that Apple's soon-to-be released operating system would drive "a product upgrade cycle."

>To order reprints of this article, click here: Reprints