In a note to clients, analyst David Bailey reiterated his long-term view that Apple’s ability to innovate will help the company maintain an edge on the competition, driving share gains through sales of existing products while still managing to be first to market in newer categories like Mobile Internet Devices (MIDs).
"That said, the nearer-term outlook is less positive, as it now looks unlikely that Apple will launch a new product category at MacWorld in early January, taking away a potential catalyst for the shares and causing Apple to try to generate demand in a tough environment without the benefit of a new offering in the first part of 2009," he wrote.
In particular, Bailey noted ongoing chatter of a "an upcoming touch-screen tablet," but said "it seems that this product is still in the development stage and will probably not be launched until the middle or back half of 2009."
Meanwhile, the analyst reported that although checks in Asia for the December quarter came back better for Apple than for the other PC and smartphone vendors, some signs of weakness have started to emerge.
"Specifically, shipments of MacBooks, iPod nanos, and iPhone were all slightly lower than what was expected going into the quarter and Apple should face a tougher environment in the March and June quarters as consumer demand takes another leg down," he wrote.
Bailey is expecting iPhone sales of around 5.5 million units for the December quarter, down about 1.4 million units from the September quarter. And while he didn't make a specific call on iPod sales, he noted that "iPod nano shipments dropped off significantly after holding up through the middle of November" while shipments have been stronger than expected for the lower-volume iPod touch.
The Goldman Sachs analyst downgraded shares of Apple to Neutral from Buy for the first time since July 20, 2006. He also trimmed his calendar year 2009 per-share earnings estimate to $4.75 from $5.13 and cut his 12-month price target on the stock to $115 from $125.
Shares of Apple were trading down $4.36 (or 4.4%) to $93.91 on the Nasdaq stock market.