Apple not immune to economic woes

Projected buying numbers the weakest for Apple this year, and the company's biggest drop in two-and-a-half years

Apple faces a tough quarter, according to ChangeWave Research, which Monday projected a drop in consumer plans to buy a Macintosh computer in the next 90 days

Of the more then 4,200 US consumers polled last month by ChangeWave who said they expect to buy a personal computer in the next three months, 29 percent plan to purchase a Mac laptop, down five percentage points from August's survey. The percentage of people who said they would buy a Mac desktop in the next 90 days is also down -- to 26 percent, off four points -- from the month before.

Those future buying numbers were the weakest for Apple this year and the company's biggest drop in two-and-a-half years, said Paul Carton, ChangeWave's research director.

As recently as August, the company's polls showed that Apple was beating all comers in planned computer purchases.

Carton blamed the increasingly grim economic news -- and the even more dismal picture for consumer electronics in general -- for Apple's decline. Overall, more than half of consumers told ChangeWave that they'll be spending less in the next three months, and 40 percent said they would spend less on consumer electronics in the same period. "Apple is not immune to these problems," said Carton. "They may be able to handle them better than everyone else, but even Apple will take a hit."

Until recently, Apple had weathered the downturn nicely, Carton continued, citing numbers from the same September survey that showed Mac laptop and desktop sales remained strong through July and August. "Mac sales then were stellar," Carton said, "but we began to see some signs in September of a slowdown. Nobody can escape from this."

Even so, Carton and others remain bullish on Apple's long-term prospects. "Once things stabilize, they'll have an even larger share," Carton said of Apple, noting that iPhone sales and planned purchases should remain a bright spot for the company.

"Sure, Apple can be affected if the economy gets seriously crappy," said Ezra Gottheil, an analyst with Technology Business Research, when asked if the company's strategy of selling premium-priced products made it immune to economic conditions. "If things get really scary, eventually that will slow Apple's rate of growth."

But Apple, both Carton and Gottheil agreed, should be able to weather the storm. "It has a huge pile of money in the bank," said Gottheil and if necessary, could reduce its prices to remain competitive in a bleak economy.

Carton also cited price cuts as an option for Apple: "I think Apple's long term outlook is healthier than any of the other companies in their space."

Apple has scheduled a conference call with Wall Street analysts and reporters for Oct. 21, when it will announce its fiscal fourth-quarter earnings and reveal Mac sales figures for July through September. Although Carton expects Apple to meet its forecasts for that quarter, he believes the company will be far more conservative in its estimates for the calendar year's final quarter.

"The larger issue for Apple, [for] all companies in consumer electronics, is that discretionary spending has been brutalized in the last three or four weeks, and that's on top of a 15-month downturn," he said. "They can't escape unscathed."

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Gregg Keizer

Computerworld (US)
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