Bear Stearns Cuts Apple Outlook

Analyst Andrew Neff cites the disappointing rollout of the new flat-panel iMac; he sees price cuts ahead

Bear Stearns cut its estimates on Apple (AAPL ), and keeps its neutral rating.

At the close of trading Tuesday, Apple posted a third-quarter profit report, which missed analysts' estimates. Bear Stearns analyst Andrew Neff says Apples' forthcoming guidance of a slight profit in fourth quarter, which implies an operating loss also is less than he expected. Neff says Apple pegged hopes on sales of its flat-panel iMac, which began to slow in May.

Neff expects price cuts for existing products, and for new flat-panel iMacs with bigger screens. He says the flat-panel iMacs could be the Cube all over again -- a product that failed to inspire customers. He thinks Apple's strategy to open retail stores is the wrong one, since it creates conflict with the companys existing challenge. A better solution, Neff says, is to migrate its operating system to Intel's architecture, but he doesn't think this is a likely move.

Neff cut his $0.43 fiscal 2002 (Sept.) earnings per share estimate to $0.32, and cut the $0.50 fiscal 2003 estimate to $0.35.

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