Forget the Bruises -- Apple Looks Appealing

The tough economic climate could present a golden opportunity for astute investors, some analysts say.
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The consumer spending slowdown, although a headache for technology giant


(AAPL) - Get Report

, may present a buying opportunity for shrewd investors.

That was the message from investment analysts Tuesday, who explained that

tech investors

could actually reap the benefits of weakening iPhone demand and an increasingly uncertain economic climate.

Citigroup Global Markets, for example,


its Apple earnings estimates for fiscal years 2009, 2010 and 2011 to reflect more conservative consumer spending.

"Soft fourth calendar quarter iPhone shipments

in 2008 and conservative guidance

in the first calendar quarter of 2009 could place pressure on the shares around earnings, but we view weakness as a buying opportunity," wrote Citigroup analyst Richard Gardner, in a research note.

Gardner lowered his 2009 earnings estimate from $5.13 to $4.78 and his 2010 expectation from $6.25 to $5.37. For fiscal year 2011, the analyst cut his earnings target from $7.02 to $5.89.

Apple's shares slipped 95 cents, or 1.1%, to $87.71 Tuesday, while the Nasdaq rose 0.5%. Shares were trading at 85.79 at midday Wednesday.

Gardner feels that the stock is "compelling" at its current levels. With the firm due to report its first-quarter results next week, investors should check out Apple, according to the analyst.

"If the shares pull back $7 to $8 around earnings -- as implied by the options -- we would be aggressive buyers," wrote Gardner.

Those sentiments were echoed by Barclays Capital analyst Ben Reitzes, who described Apple as the best long-term IT hardware growth story.

"Despite a weak economy, we believe Apple's valuation is compelling given about $27 per share in cash and prospects for $9 per share in free cash flow for fiscal year 2009," he wrote in a research report.

Reitzes predicts Apple will have first-quarter earnings of $1.31 on revenue of $9.4 billion, which would be a 2% revenue decline from the same period last year. This is, however, below analysts' earnings and revenue estimates of $1.39 and $9.87 billion, respectively.

Citigroup's Gardner was somewhat more bullish.

"While our modeling suggests that December quarter revenue could be several hundred million below consensus of $9.9 billion, we still expect earnings per share of $1.42 versus consensus of $1.39 on better-than-expected gross margin."

Apple may nonetheless be feeling the strain in its

iPhone business

, according to Gardner.

"Checks suggest iPhone shipments potentially below 4 million in the fourth calendar quarter of 2008, versus 6.9 million in the third quarter as Apple reduced channel inventories heading into the seasonally weaker first half," he wrote.

Reitzes is slightly more optimistic, predicting 4.5 million iPhone units and Mac growth of 3.7% year-over-year. Reitzes expects Apple's first-quarter iPod sales to decline 13% compared with the prior year's quarter.

The analyst, however, expects Apple to ship 2.5 million iPhones in the second quarter, with iPod and Mac sales declining 2% and 10%, respectively, year-over-year.

Apple, which competes with


(NOK) - Get Report






(ERIC) - Get Report

in smartphones, and with


(DELL) - Get Report



(HPQ) - Get Report

in PCs, continues to be seen as a key indicator of

tech spending


Just as consumers' wallets are closing, corporate coffers are also snapping shut, according to the latest research from technology analyst firm Forrester which predicts tough times ahead for firms selling IT equipment.

Global purchases of IT products and services by businesses and governments will decline 3% in 2009 to $1.66 trillion, says Forrester. The 2009 slump is in stark contrast to 2008, when IT purchases actually increased by 8%, and would end seven years of consecutive growth, it said.

"For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010," wrote Andrew Bartels, Forrester's vice president and principal analyst, in a statement. "Unlike in past years, there will be no significant growth markets to offset the weak ones."

Despite shrinking investments in communications gear, computers and services, Forrester nonetheless predicts some bright spots, with $388 billion worth of software purchased in 2009, the same as in 2008.