Merrill Lynch analyst Steven Fortuna on Thursday warned that Apple's sales for the October-to-December quarter might fall short of the company's $1.4 billion target. And although the new flat-panel iMac is much needed, Fortuna said that by introducing the machine during the slowest part of the year for computer sales, it may take some time for iMac sales to take off.
"We think Apple's new iMac was introduced at the worst possible time for consumers (after the holidays), during what is normally a seasonally weak March quarter," Fortuna wrote in a research note Thursday.
Of course, this is a perennial issue for Apple, which typically introduces new computers at the Macworld Expo in January.
A year ago, Apple had a disastrous December quarter as the company was looking to cut through a huge backlog of inventory. Excluding investment gains, the company posted a $247 million loss for that quarter.
In the prior three years, Apple had a strong December quarter despite introducing new products at January's Macworld. That includes last year's introduction of the Titanium PowerBook G4. In 1997, however, the company saw sales dip in the December quarter and posted a loss amid weak sales of its Performa consumer machines.
Other analysts also said this week that they expect Apple to do no better than match its earlier forecast for the December quarter. In its last earnings report in October, Apple said it expected sales of at least $1.4 billion and earnings of at least 10 cents per share for the December quarter.
"While we may be reading too much into things, the fact that Apple did not use the Macworld forum as an opportunity to provide an update on its financial guidance as it has done in the past... leads us to believe the company may only come in line with its December quarter guidance," Bear Stearns analyst Andrew Neff wrote in a research note earlier this week.
A consensus of analysts expects Apple to report earnings of 11 cents per share, according to First Call.
Fortuna also noted that Gateway, which, like Apple, sells heavily to consumers, announced this week that its quarterly revenue would be lower than analysts were expecting.
An Apple representative declined to comment, noting the company is in the quiet period prior to its earnings release Wednesday.
David Bailey, an analyst at Gerard Klauer Mattison, said he expects Apple to report earnings in line with estimates, but he added that he believes investors are more focused on the future than on Apple's recent past.
"At this point, the December earnings are not the most important part we think investors are looking at for Apple," Bailey said. "What's more important for people is to see sales of iBook and iMac pick up in the summer and fall."
Apple could face additional hurdles in the coming quarter, Fortuna said, given the staggered release of the new iMacs. Apple is introducing the $1,799 model this month, the $1,499 version in February and the $1,299 model in March.
"We think the low-end version is where a large part of the volume will be, and this version will not really be a factor in the March quarter," Fortuna said.
In addition, he said Apple faces another challenge in trying to maximize sales of the older iMac designs without ending up with too much inventory.