This is an odd time to downgrade Apple, since just two days ago, analysts were raving about how much cash Apple has (I think they said $21Billion cash) compared to other computer companies. Dell and HP are selling assets and cutting jobs, while Apple does not have to do any of that because they have a huge amount of cash. Add in the income from iPhone sales (which continue every day), iMacs, and the MILLIONS of iPods that will be sold this holiday season, and Apple is looking in pretty good shape!
(these junior analysts will be very regretful after Apple reports earnings in October)
Not really that odd, they are viewing the future economic situation and believe that with Apple offering a premium product, the credit markets ina big squeeze and the overall economic outlook looking poor they do not see Apple continuing with strong sales.
The recommendations they are providing are more for the investors who go through their organization. They can't post a rosey picture of Apples future sales when the market is not looking strong. Quite a few brokers got caught recommending stocks when in fact they knew the stock was no where near as good as they suggested, they were getting benefits in return for providing positive ratings on stocks that they had other interests in which were either not disclosed or not disclosed properly.
As stated many times, Apple itself is just fine, they have little to no debt and significant cash on hand, but that does not determine the stock price. Sitting on lots of cash and doing nothing is no different than sitting on no cash and making bad decisions as there is no value to the stock holders and thus the stock goes down. Apple's problem is that they sell what is viewed as premium products, this is especially true in the computer market, less so in the media player market. When the economy is poor people do not feel confident to make big purchases, they act conservative. That being said, a current Apple computer owner is highly likely to replace their current system with another Apple computer, BUT, if they are not in a position where they MUST upgrade (failed computer) they will hold off on making the purchase until things improve.
For people not necessarily tied to Apple products, do you buy the $500 PC replacement or the $1000 Apple? In good times the jump to the Apple isn't out of the question, in bad times it is hard to justify the price difference. If Apple had some products that were priced at say a $100-200 premium to the PC market then although people will give a lot of though to the price difference it is a more acceptable price jump in a conservative market.
As to the discussion about "but Apple offers a better product" or "but Apple's computers are priced much closer to the similar performance PCs", reality says that in this kind of a market, the cheaper product is more appealing as price is a more influential factor. There will be plenty of people buying Macs, just the potential market shrinks a bit.
