Apple's Upgraded MacBooks Fall Short

Analysts expected much more and lower prices.
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Shares of Apple (AAPL) - Get Report continued to slide Wednesday as questions persist about the company's long-term laptop strategy.

The company tried to ease investor worries Tuesday when it introduced a line of upgraded laptops, a new aluminum casing technology and a break on prices, including an entry-level MacBook for under $1000.

One analyst, however, warned that Apple didn't slash prices far enough. "The entry-level $999 MacBook price point may be insufficient to offset competition ($500-$800 laptops) and mitigate the risk of headwinds from slowing consumer spending," said Mike Abramsky of

RBC Capital Markets

in a research note on Wednesday.

Apple faces stiff competition in the entry-level category from

Dell

(DELL) - Get Report

,

H-P

(HPQ) - Get Report

, and

Lenovo

, which offer mini-laptops for $500 and less.

The luke-warm response to Apple's presentation was reflected in early trading Wednesday of Apple's shares, which were off $2.94, or 2.82%, to $101.14. That was on top of a 6% decline on Tuesday.

Abramsky, who characterized Apple's MacBook announcements as "Anticli-Mac-tic", expressed concerns about the company's gross margins.

"The launches did not in our view sufficiently dispel concerns over GM's (street in F09 at 33% vs 30% guidance)," he wrote. "Refreshed MacBooks feature striking new designs, but with price points remaining higher than generally expected."

Nonetheless, Kevin Keller, a hardware analyst at

iSuppli

, said Apple should be cut some slack . "The market was looking for another bombshell from Apple, they have set the bar so high," he said, alluding to the company's headline-grabbing

iPhone launch earlier this year.

Against this backdrop, the MacBook announcements were much more 'incremental', he said.

RBC's Abramsky said the company raised the bar in notebook design and performance with its new MacBooks. "Refreshed MacBooks will assist Mac momentum into Q1/Q2 and the Christmas season," he wrote, while warning of plenty of hurdles ahead.

"In our view, risks to valuation remain high (margin below expectations, slowing growth) within a deteriorating global consumer demand environment," he said in his report. "We see valuation range-bound, pending improved visibility to growth and margins, and look for more attractive entry points."