Barclays Cuts Apple Target Price, iPhone Sales Estimate

10:23 am, November 7th, 2008, Ed Sutherland

The drumbeat continues as Barclays Capital Friday became the latest analyst firm to trim its projection of iPhones sales for the first quarter of fiscal 2009. Citing the weak economy, analyst Ben Reitzes believes 5 million handsets will be sold during the quarter, down from the previously expected 6.2 million.

In a note to investors, Reitzes cited a “continued weakness in the economy” and an inventory already flush with 2 million iPhones.

Barclays also cut its target price for Apple shares to $121 from $125, however retained the Cupertino, Calif. company stock as overweight.

Apple will report $9.6 billion in revenue for the December quarter and $35.7 billion for fiscal 2009, down from $36.1 billion, the note predicted Friday. Apple reported $7.8 billion for the quarter ended Sept. 31.

Barclays reduced its estimate for fiscal 2010 to $42.8 billion, down from $43.3 billion.

Apple is optimistic but realistic about the current economic situation, according to the analyst. Reitzes said he “recently met” with retail senior vice president Ron Johnson, senior vice president and finance chief Peter Oppenheimer and Internet vice president Eddy Cue at Apple’s Cupertino, Calif. headquarters.

Along with a cut in projected iPhone sales, Apple is expected to announce iPod sales fell 13 percent for the year, according to the analyst firm.

Reitzes issued several potential solutions for Apple during the economic slowdown, including introduction of new iPhones and an answer to the growth of inexpensive netbooks.

Although Apple is expected not to announce any new hardware until January, the financial analyst said Apply may unveil a price cut to stimulate iPhone sales along with a low-end handset near the third quarter of fiscal 2009.

Barclays also said China might be added to the list of countries selling the iPhone. Another possibility is giant discount retailer Wal-Mart might join Best Buy along with AT&T and Apple selling the handset.

The analyst also suggest Apple may introduce in the second half of 2009, an ultra-portable device priced between the $399 iPod Touch and the $999 MacBook. Apple’s current absence of a product in the netbook category was termed “mysterious.” Although CEO Steve Jobs has remarked Apple doesn’t do cheap well, Reitzer believes a device priced between $600-$700 could sell 3.5 million units per year.

Reitzes becomes just the latest analyst lowering prediction for iPhone sales due to the economy. Thursday, BMO’s Keith Bachman trimmed his estimate of iPhone sales to 5.6 million from 6.6 million. That followed a Friedman, Billings, Ramsey report estimating a possible 40 percent cut in fourth quarter iPhone production.

Posted by Ed Sutherland in News, iPhone | Comment on this article