Analysts are voicing concern over whether or not Apple will meet its $1.5 billion earnings target for this quarter, citing supply problems with the new iMac as the main cause.

Prudential Securities analyst Kimberly Alexy warned Cnet: “Demand for Apple's new iMac remains strong, we are concerned about the company’s ongoing inability to execute new product ramps efficiently.” That report claims analysts now predict revenues of $1.43 billion.

It’s believed that shortages and higher-than-anticipated costs of 15-inch flat-screen displays and LCD controller chips have slowed down production.

Lehman Brothers analyst Dan Niles is more optimistic than Alexy. Apple has resolved its manufacturing problems, he claims. Despite this, he sees a challenging quarter for the company.

'Close call' on profits warning MacMinute reports Needham Brothers analyst Charles Wolf, who suggests that, should a profits warning emerge, it will arrive between March 25 and April 5. The analyst is “sceptical” that Apple will announce a warning, but expects it to be a close call.

Apple had some inkling that iMac supply would be constrained. During the company's first-quarter financial call, chief financial officer, Fred Anderson, said: “It will take most of the quarter to ramp-up the manufacturing of the new iMacs, so we’re not likely to meet expected demand during the quarter.”

At the time, the CFO also expressed the company’s optimism for its prospects in the latter half of this year, despite declining profit margins due to increased component costs. However, reports suggest that flat-panel screen prices have risen beyond consensus expectations.

Wolf observes that Apple’s G4 professional systems aren't selling well in the US. Resellers approached by Macworld UK last week indicate that trade in Apple’s professional models (particularly 1GHz Power Macs) and portable Macs remains healthy in the UK market. Independent reports indicate that Apple’s European market behaviour reflects the UK experience. International sales accounted for 48 per cent of Apple's business in its last quarter.

It’s understood that significant consignments of new iMacs began reaching dealers last week, making dents in their back orders.

Apple's second quarter 2002 ends March 31. Its stock closed at $24.74 last night, down $0.21.