“For years, owning Apple Computer Inc. stock was like owning an Apple computer — a vote of confidence in a company that sometimes seemed as if it would be crushed any day by larger competitors, chiefly Microsoft Corp.,” Mike Musgrove writes for The Washington Post.
“But, despite some close calls over the years, Apple has survived and thrived — and so, lately, has its share price. As many tech stocks marched upward this year, Apple’s share price has been growing even faster than tech bellwethers such as Dell Inc. and Intel Corp. On April 8, 2003, for example, the stock closed at $14.45 a share. Recently, Apple shares cracked the $28 mark,” Musgrove writes.
“While Apple’s rising share price rests on its impressive success in the digital music world — with its best-selling iPod digital music player and its popular online music store — even longtime observers of the company are surprised by the stock’s extended rally,” Musgrove writes. “Futurist Paul Saffo, a director at the Silicon Valley think tank Institute for the Future, said Apple’s stock is ‘like Disney stock used to be’: People buy it for sentimental reasons more than economic reasons. People tend to grow attached to their PowerBooks or iPods and end up wanting to own a piece of the company.”
“Like many Apple watchers, Saffo credited the savvy business moves of Apple’s charismatic chief executive Steve Jobs for much of the stock’s recent value,” Musgrove writes. “If Jobs were to leave the company tomorrow, he said, ‘people would rush to sell their shares. The iPod’s really cool, but it’s not a long-term thing,’ he said. ‘Apple has to be asking itself what’s next. What’s the next equivalent of the iPod?'”
“In a recent report, Merrill Lynch & Co. analyst Steven M. Milunovich figured that the iPod and online music business will be worth almost $1 billion to Apple this year. ‘We’re . . . optimistic in believing that iPod is not just a one-hit wonder that will be knocked off,’ Milunovich wrote. Several would-be competitors to Apple are trying to dream up an ‘iPod killer,’ but none has matched the company’s success. Microsoft, for instance, has been tinkering with software for products that play music and movies without generating nearly as much buzz,” Musgrove writes.
“Hewlett-Packard Co. this year scrapped plans to develop a digital music player and announced plans to license the iPod. Dell’s slightly cheaper portable music player hasn’t caught on and rival online music services such as the new version of Napster haven’t been much competition to Apple’s online music store,” Musgrove writes.
Full article here.