Analysts questioned whether Apple could reach its stated goal of 10 million iPhones for the year, and mounted evidence that growth was slowing in the firm's mainstay product lines on Monday, sending shares slightly down.
Keith Bachman of BMO Capital Markets analyst cut his price target on Apple's stock to $140 a share from $160, saying that the consumer electronics firm's three growth drivers -the iPods, iPhone and Macs - has now turned to one, that being the company's line of Macintosh PCs.
Shares slipped 32 cents to end Monday trading at $119.74.
Bachman said moves against the PC marketshare were continuing to rise, with strength in desktops in particular, and raised his Mac sales estimates to 9.4 million units from 8.2 million for Apple's current fiscal year. He also raised his forecast for Mac sales for Apple's current quarter to 2.06 million units from 1.87 million.
Computer sales will play an increasingly important role for the Cupertino-Calif.-based company as evidence points towards slowed growth sales of the iPhone and its staple iPod music players.
While we believe the iPhone has the potential to drive material earnings growth for Apple, recent data points suggest the business is facing two significant challenges: (1) overall demand for the handset appears to be falling short of expectations; and (2) the incidence of 'unlocking' has been much higher than expected, according to Bernstein analysts Toni Sacconaghi.
Sacconaghi called Apple's self-imposed 10 million iPhone sales target optimistic, especially if the company insists on maintaining carrier revenue share agreements without a price cuts or newer models. Apple currently prices the iPhone at $399 and $499, and has an exclusive carrier agreement with AT&T Inc
The analyst also noted that iPhone sales averaged 180,000 units a week in the fourth calendar quarter of 2007, which stands as Apple's busiest period of the year.
Echoing similar recent comments from other analysts, Bachman said that demand for both iPods and iPhones is weaker than we previously anticipated.
He now sees Apple selling 9.5 million iPods and 1.4 million iPhones in the March quarter, down from his previous estimates of 10.5 million and 2.1 million respectively. For the year he expects 51.1 million iPods, down from 54.6 million, with 7.7 million iPhones, down from 9.3 million - shy of Apple's 10 million goal.
Mac sales may make up for the slack, with Apple estimated to sell 2.06 million untis in the quarter, up from 1.87 million.