by , 8:15 AM EDT, August 17th, 2004
Analysts with Prudential Equity Group and UBS warned Monday that continued shortages of G5 processors means Power Mac G5 delays could persist into next quarter and could further delay the forthcoming G5-based iMac.
"Following a series of recent checks on Apple, we believe that availability of the company's 1.8 GHz and 2.0 GHz G5 processors may be worse than initially anticipated," Prudential said. "Apple had previously stated that it expected to have shortages of its 1.8 GHz and 2.0 GHz processors through July, with supply catching up in August. We now believe that IBM may be having difficulty meeting its revised supply commitments."
UBS echoed that sentiment, informing investors that the "key risk" on Apple in the near-term "remains IBM's ability to produce enough G5 chips." UBS said it believes IBM is devoting more resources to the matter on almost a weekly basis with some success in yields of late, but continues to face production problems. "As a result, Power Mac shipments should face yield issues into fiscal first quarter 2005 and a new iMac to be launched later this month to strong demand, should be met with shortages."
Prudential and UBS both noted that impact of the shortages should be modest when Apple's bottom line is viewed as whole. Prudential maintains its "neutral weight" rating on shares of Apple and a $27 price target, as well as its fourth quarter earnings estimate of 18 cents per share.
"Apple could still deliver significant sequential improvement into calendar fourth quarter 2004, with its own product cycles (iPod & iMac, etc.) that should be able to insulate it somewhat from macro-economic issues," UBS adds.
Shares of Apple closed down 6 cents Monday to $30.78 and were down another 8 cents in after hours trading.