Apple iMac News Report
=Apple Down After Delaying Launch Of New iMac>AAPL
Dow Jones Equity News, Friday, July 02, 2004 at 10:05
By Donna Fuscaldo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Shares of Apple Computer Inc. (AAPL) fell in trading Friday after the company said it would delay the launch of its new iMac desktop computer.
The Wall Street Journal reported in its Friday edition that Apple had stopped taking orders for its current generation of iMacs and expects inventory of these machines to run out in a few weeks. Apple had hoped to have its new iMac line ready by this time, but was unable to meet its internal goal.
Following news of the launch delay, shares of Apple fell 6.4%, or $2.08, to $30.22, on volume of 2.8 million shares. Average daily volume is 6.5 million.
Over the last two months, Apple's stock has been on a tear, as investors reward it for the success of its iPod digital player. But many watchers had expected Apple to unveil a new line of iMacs at its worldwide developers forum earlier this week and were disappointed when Apple didn't do so.
Apple didn't elaborate on what prompted the delay of the new iMacs.
The company reports third-quarter results July 14. Industry watchers expect to hear more about the delay during Apple's conference call to discuss the results.
While some Wall Street watchers said the delay wasn't too worrisome, they did express concern over the fact that
Apple will run out of its current line of iMacs likely by the end of July and won't have any iMacs for sale from August to mid-September. The end of the summer is a prime shopping time for computer makers, given the back-to-school season.
Charles Wolf, an analyst at Needham Company, had expected Apple to sell about 150,000 iMacs in the September quarter. Now he said the worst-case scenario is Apple sells only 50,000. The analyst noted in a research report that
the misstep will remove about 5 cents of Apple's fiscal year 2004 earnings, bringing it to 55 cents instead of 60 cents. Analysts according to Thomson First Call expect Apple to report full-year earnings of 63 cents a share.
Meanwhile, Steven Milunovich, an analyst at Merrill Lynch, said he now expects Apple to sell 105,000 iMacs in the September quarter, down from 210,000."This bungled product transition gives credence to the bears' concerns about Apple's execution and will take some wind out of the stock's sails,"wrote Milunovich in a research report Friday.
Officials at Apple weren't immediately available to comment. Needham's Wolf and Merrill's Milunovich don't own shares of Apple. Merrill intends to seek an investment banking relationship with the company.
-By Donna Fuscaldo, Dow Jones Newswires; 201-938-5253;
donna.fuscaldo@dowjones.com
(END) Dow Jones Newswires
07-02-04 1005ET
SOURCE Dow Jones Equity News
07/02/2004