ATR: Low Expectations for Apple September 9 Event

by , 12:00 PM EDT, September 5th, 2008

American Technology Research's Shaw Wu published a note to investors on Friday, obtained by TMO, and outlined his low expectations for a break-through announcement by Apple at the September 9 event. The focus is likely to be iPod specific, and new notebooks aren't expected to be introduced. However, there are some potential wildcards.

"While there is always room for surprise, it seems this event may be somewhat underwhelming vs. previous expectations and events," Mr. Wu wrote. "Over the past several days, AAPL shares have pulled back as expectations have likely come down."

He also pointed out that the "Let's Rock" theme suggests that there won't be an introduction of new Macs, and that's being viewed as disappointing. The future of a possible 6th generation iPod classic is unclear.

The ATR analyst continues to believe that Apple will eventually introduce new notebooks with radical new designs. The MacBook Air could see a minor refresh to increase its value proposition.

At any Apple special event, there is always room for a surprise. Potential wildcards were identified as "1) an advanced Apple TV with DVR and TV tuner capabilities and/or 2) new touch form factors (iPod-Mac hybrid) with larger screens." The latter has been referred to as the so-called MacBook touch.

Despite the fact that expectations are low for the event, Mr. Wu reiterated that Apple's competitive advantages remain intact, namely: "1) strong brand loyal customer base; 2) vertically and horizontally integrated hardware, software and service model (iPod + iTunes, Mac, Apple TV, and iPhone); 3) proprietary interface technologies (clickwheel and multi-touch); and 4) unique and pleasant customer experience with its Apple stores."

Mr. Wu pointetd out that the macroeconomic disturbances are within the lower income demographics and are not likely to affect Apple for now. Apple remains one of the best positioned large-cap technology companies.

Shaw Wu's overall conclusions was that shares will remain volatile for now, but current levels are a buying opportunity for long term investors. He maintains his Buy rating and a six month target for AAPL of US$220.00.

In mid-day trading, AAPL was at $159.27, down $1.95 for the day.

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