“Why are so many investors upbeat [about Apple Computer]? There’s still the possibility (a good one, in my opinion) that many iPod users will switch to Mac computers. Last quarter, Apple said that more than 45% of the customers buying computers in its stores are new to Mac. And the switch to Intel chips in new Macs — available six months sooner than previously anticipated — should allow the company to capitalize off its powerful tailwinds at the moment by marketing faster, more powerful Macs,” Alyce Lomax writes for The Motley Fool.
“Apple’s retail stores haven’t nearly reached saturation, and if you’ve been to one lately, you’ve probably seen for yourself what an ‘experience’ it can be. Last quarter, $1 billion of the company’s $5.7 billion in sales came from Apple retail stores,” Lomax writes. “IDC recently said that 106 million MP3 players will be purchased in 2006; at the moment, the iPod owns 70% of the market. Obviously, a big part of Apple’s future relies on the iPod’s continued dominance, since it’s significantly polished the Apple brand and spurred a possible ‘halo effect’ of increased Mac sales. There are plenty of high-powered rivals who want a piece of the MP3 player market; Sony, Dell, and Creative have competing MP3 players, and they’re drooling over the opportunity to woo consumers.”
“Last, there are the issues of whether Apple can attract new users to buy iPods and convince existing iPod owners to upgrade. It’s quite possible that many existing iPod owners won’t be willing to shell out yet another $400, again and again, for the latest model. (And how long will Apple be able to add must-have innovations to each new model?) All right, so here’s my final answer about Apple as an investment right now: I don’t know. I certainly don’t want to go on record saying, ‘Don’t buy Apple.’ I am impressed — the company has proved bears wrong for several years now while the iPod became an absolutely amazing phenomenon. However, it just seems nearly impossible to extrapolate what future growth rates will be,” Lomax writes. “In other words, a lot of things have to go right, and not many can go wrong. And of course, at some point, what’s known as the law of large numbers is going to kick in (it always does). That’s why I couldn’t pull the trigger on Apple as my Stocks 2006 recommendation. There are plenty of risks investors need to be aware of — maybe now more than ever. For now, I’ll keep on loving Apple the iPod Innovator. As for Apple the Stock? It’s been a great story thus far — one that I look forward to watching as 2006 unfolds.”
Full article here.
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Apple won’t need a stock split soon. The way the stock has dropped, it will hit a post-split price all by itself!
The question now is, if you’ve been waiting to buy, is now the time or might it be wise to see if it drops further?
Way to take a stand there Lomax.
One reason you might be upbeat about AAPL is that there is plenty of upside for this stock. The Mac sales have been fenomenal but they will be much bigger once someone finds a way to run Windows XP in a virtual environment along side MacOS X on the new Intel based Macs. That would truly allow the new machines to be deployed in corporate infrastructures without having the negatives of the PowerPC based machines running VPC. And we all know there are still times you get forced to run Windows apps…
The stock is dropping because Apple tried (responsibly) to temper investors from overheating the stock. Their ‘warning’ made people pull back. They are still on track for their second biggest quarter ever. EVER!. The next gen iPods and the digital living room strategy hasn’t even surfaced yet.
There’s all you need to know.
Wow. That analysis was as solid as Jell-O. It’s good to be upbeat and you can dance to it.
A couple of points about this statement: “Last, there are the issues of whether Apple can attract new users to buy iPods and convince existing iPod owners to upgrade. It’s quite possible that many existing iPod owners won’t be willing to shell out yet another $400, again and again, for the latest model.”
First, this is exactly why Apple hasn’t licensed Fairplay. You buy an iPod, you buy music from iTMS. When it comes time to replace your iPod, do you buy another one or do you buy a different brand of DMP? You buy another iPod, for one reason because you’ve loved the one you have, but perhaps more importantly, all the music you’ve purchased for it from iTMS would have to be converted to put on a different DMP. Even if you were unhappy with the iPod (yeah, right) it might be too much trouble to go through that.
Second, regarding upgrading your iPod every time Apple introduces a new one, who does that? I have a 3G 20 gig iPod. I didn’t get the 4G, or the 5G. So far my iPod has worked great and eventually I’ll replace the battery, but I expect I’ll have it for another couple years at least.
Oh yes people are upgrading iPods – if the new designs are irresistable they will fly of the shelves again and again. And more to the point, those 45% of buyers new to Mac are all becoming advocates for others to switch too.. so the snowballing effect is underway which will bring a record year, surprising even Apple execs imo.
It’s also dropping (imho) because investors have always been extremely skittish with Apple. The years and years of doom and gloom have yet to fully wear off. Most people still see Apple as a one hit wonder with the iPod, and when the iPod sales drop, they expect the company to go back to being Apple circa 1998.
Did this guy actually say anything?
nice, ndelc, I have a 2G iPod that kicks butt and don’t see myself replacing it for another 2-3 years (it’s actually old school now, and I kinda dig that). But good point about fairplay. Combine that with the best design in the business and Apple will have iPod revenue for a long time to come…
Personally, I find the analyst’s honesty absolutely refreshing. Everyone who has made solid predictions about Apple’s stock the last few years has been badly embarrassed. Lomax is the first to come right out and say it: Apple has never followed analysts “rules”. They’ve been so good at confounding the naysayers and pundits that it’s useless to say what’s going to happen.
And she’s right: they’re such a fascinating company, in the middle of, and sparking, an unfolding digital media revolution, that you can’t tear your eyes away. And since no one except Apple knows what Apple have or are planning, only an idiot would predict how their stock will perform. Lay off of her; Lomax called it perfectly.
Apple stock price is dropping so Disney can snap it up at a cheaper price.
I’ve got a 1st gen (still works great, no battery replacement) and a 4th gen.
No plans to upgrade this year unless there’s some great feature i can’t live without.
I may get a Nano if my 1st gen craps out, or I might just get a nano anyway.
Wow! 106mill, even if Apple get 60% that’s an Avg of 16 mill a qtr. Crazy!
And if those new iPod sales lead to a conservative avg of 24 songs (2 cds) a year per ipod purchase, that would be, what, like 1,5 Billion songs in a rolling 12 Mos.
(all numbers are speculative fantasy and no statistical thought was given, so pls don’t blast me)
Ohh, thank motherf-cking GOD!!!!!!!!
12:33pm EST, and that’s the FIRST “increase” I’ve seen in AAPL in a long time. Hey, it’s only .13, but let’s see how long it lasts.
The article points out the problem of the average stock investor/player – they have no technical acumen to know why Apple has defied most stock analysts.
I recently bought 50 additional shares of Apple (AAPL) as a long-term investment for one reason – at some point, in 1 to 3 years, Apple is going to license OSX for install on any box. When this happens, Apple stock is going to explode.
Now is the time to get on board and hang on for a phenomenal ride!
Okay, okay — 12:55pm EST. Still up .14.
Could it be? Could it possibly happen?
Will AAPL actually end the day “UP”?
[Breathes frantically]
Don’t sweat the recent drop in AAPL. Analyst angst is no cause for alarm.
As for the idea that Disney would buy Apple, or the other way around, I just do not see it. It would put Apple in competition with Hollywood minus Disney. But I do see Apple making win/win deals with Disney, which, when they succeed, will drive other content owners to deal with Apple.
And, of course — 1:59pm EST . . . and we’re DOWN .72!
Yes, all acoording to plan. [painful sarcasm]
Apple will end 2006 up over 100% (yet once again).
My prediction.
Considering where the post-MacWorld high was, this is a good time to buy. Bear Sterns just reiterated their buy recommendation targeting $103, while Piper and many others have stuck with buy. But don’t take their word for it. Do you believe in the stock? Then stick with it. Years ago, I bought my first AAPL stock at 9; in pre-split dollars, it is currently at 140+; could have taken some profit, week before last, but why? It’s only going up. So, I just bought another 100 shares. Maybe it will dip into the 60s again, and so I spent a few bucks extra, but I doubt it will ever see the 50s again.
One thing to bear in mind is that the current dip is largely driven by Apple’s exceptional conservatism as applied to their projections for Q2. That conservatism makes sense. But to me, I look at the stores [remember how Apple’s retail strategy was derided early on as foolhardy?], their plans to keep deploying them, the real halo effect, the success of the iTMS, the Disney-Pixar deal, and I am wondering to myself: After “Cars,” might Pixey next make “Stocks”?
With the iTMS at already a billion song annual run rate, you’re thinking too small.
>>>I recently bought 50 additional shares of Apple (AAPL) as a long-term investment for one reason – at some point, in 1 to 3 years, Apple is going to license OSX for install on any box. When this happens, Apple stock is going to explode.
Nah..that would be like HP selling an iPod with their own skin on it. Never happen. I couldn’t imagine a Dell with OS X sans iLife and other high-powered goodies found in Apple ‘puters. (Phoning broker….)
People are selling AAPL based on rumors from competitors that are saying things like “new intel imacs aren’t leaving the warehouse”
Anti-Apple-dominance-corporations are taking advantage of the momentum Apple itself triggered by lowering expectations.
However One thing i should mention is that, even before the MacWorld show, the stock was at $75’s few days before it went as low as $70.70
Alot of people sold it assuming it would go under $70 however it never did, it was pretty solid right above the $70-71 level.
Which may mean this can indeed be a buying oppurtunity.
Apple company/stock was valued at $70+billion right after MacWorld news. Right now it is around $59billion.
Which means $11Billion worth investors have sold their stock.
If 1/2 of them were in it for the short term only, the other 1/2 might want to jump back in as soon as they notice the stock has hit the bottom.(possibly on monday, tuesday, and wednesday)
This is basicly just my opinion, i maybe biased since i own some shares. I would say it is very unlikely that it would drop below $70 much, and it probably hit the bottom today.
What scares me is the how APPL had been moving up and down based on how GOOG was acting.
It is possible alot of the AAPL holders were also holding GOOGLE stock and GOOGLE’s sharp decline actually made them ignore logic and sell APPLE.
I think GOOGLE is a good company however it has to much hype in it, and it is not worth $120+billion. In my opinion Google will go below $200 this year.
I am somewhat glad to see hear GOOGLE MP3 Service eventho it sounds like a threat to APPLE’s ITUNES. because this can be the news that finally seperates APPLE from GOOGLE, and APPLE wont have to be impacted by GOOGLE’s decline in the future.
This can even open up “self defense” style oppurtunity for APPLE, and APPLE might start their own Google alike Search Engine.
Recently there was some rumors that GOOGLE was gonna start their own MP3 store, i think if it wasnt for that news, AAPL would probably finished the day in positive today.
I have noticed APPLE web site focusing on their MACs more than IPODs it is a very smart move, companies out there might be able to steal some customers from APPLE by making dirt cheap MP3 players however, they wont be competing the MACs, they simply dont have the technology or the know-how.
Which gives APPLE a very solid edge, even over Microsoft, Sony and Dell.
Microsoft is worth $240billion?
Apple is worth only $60Billion?
Yet Microsoft doesn’t even make their own PCs..
and most of their stuff is flawed, from Internet Explorer to MSN Search, not only do they keep losing battles, they can’t even stop the bleeding.
As Microsoft keeps up with its trend, it will only make more and more people switch to Apple.
BTW, Adobe is probably going to go extinct also.
Apple is coming up with some very cool basic tools such as IWEB.
Someday iWEB will be good enough to be a Photoshop alternative.
With a CEO like Steve Jobs, Apple’s future is as bright as their signature color.
Oh, btw. the rumors are not true, just take a look at Amazon’s top selling list. Dominated by Apple intel iMacs
http://www.apple.com
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