“How do you value a company that just seems to ‘get it’? That’s my dilemma with Apple. On Tuesday, the Mac maker teamed up with Nike to introduce the Nike+iPod Sport Kit. It’s got a tiny electronic sensor, designed to slip into a Nike running shoe, that wirelessly transmits fitness information to a receiver plugged into an iPod nano,” Tim Beyers writes for The Motley Fool. “Nike has four million iPod-ready shoes available now, and according to BusinessWeek, that total could soon grow to 10 million. That’s an immediately addressable market of up to $290 million on kits alone for Apple.”
“But of course, that’s not where the real opportunity lies. Jobs & Co. need to give consumers excuses to buy more and different versions of the iPod, especially now that there are roughly 50 million of the devices already in consumers’ hands. Creating specialized uses for the iconic music player is one way to do so. In that sense, I believe the “Nike+” program will likely be the first of many similar partnerships,” Beyers writes. “That has me wondering: Is Apple’s stock really expensive? The company excels at marketing. It earns the highest customer-service marks in the computer industry. Its products are almost always technically astute. And its business model is so good that competitors are copying it. Just how successful does Apple have to be before we agree that it’s cheap?”
Full article here.
[Thanks to MacDailyNews Reader “vitaboy” for the heads up.]
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It was really cheap when I bought it at $8.75 (split adjusted).
First?
Interesting headline MDN..
No where in the article does it say that “Apple shares are cheap right now.”
Finally an analyst that gets it! 2nd quarter results are going to surprise many!
Buy apple stock!
It is the weirdest Damn thing. No good news seems to be enough to lift the stock. New laptops-down. Maybe the Nike deal, small as it is in real market potential will do the trick. I doubt it.
I am starting to think it will take mutual fund managers starting to use Apples to make a difference.
It is just very strange.
Here here…
“Just how successful does Apple have to be before we agree that it’s cheap?”
Trevor, I think that pretty much sums it up. That IS from the article.
I’ve read a lot of articles that suggest Apple’s run is over. I don’t believe it is, but it’s going to take some really good numbers to convince major investors otherwise, I think.
Thats what I thought too, when I bought ’em at 70 bucks apiece.
Oh well
Not Bill –
If you want to understand AAPL, you need to understand the _market_ it is in. Tka e alook at historical AAPL prices relative to other tech companies and the tech indexes on a given day. You will see that AAPL swings with the over all market.
In addition, there is something called the Beta (B) for a stock. it is a ratio of how much the stock swings realtive to the over all market. A Beta of 1 means it moves with the market. AAPL has a Beta closer to 2 which means that when the market is up, AAPL is up even more…when the market is down, AAPL is down even more.
Of course, the Beta is not the only thing that influences the stock – so yeah when earnings are announced, new products, or competitors make announcements, all this has an effect on AAPL for the day.
While it remains to be seen, my guess is that the new Nike+iPod kit will be a huge hit. As the article noted, if Apple sells out the first 4 million kits, that’s $290 in new revenue to the bottom line. That’s gotta give the stock some upside.
I can only imagine that Reebok, Adidas, and Puma are now beating on Steve Jobs door to produce something similar. Remember what happened after Apple launched videos on iTMS with ABC/Disney?
Suddenly, instead of $290 in new revenue, you might be looking at $1 billion in new revenue.
So, exactly how much more successful does Apple has to get before people get its not just another boring Dell?
Obviously, I meant $290 MILLION in new revenue (not $290)
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Thanks “me.” That is an interesting perspective. Apple is “caught in the tides of a larger investment sea.” And, Apple tends towards greater extremes that the overall tech market.
I keep hoping Apple stock will move counter the overall market because such great things are happening there product wise. I am perhaps too much of a fan of all things Apple.
Investors will believe that Apple WAS cheap in the low-60’s, once they realize two things:
(1) MacBook sales are above estimates. The Intel transition is going much better and faster than expected. This will help in the near term.
(2) The iPod run is just beginning. With this Nike product, Apple is starting to turn iPod into a “wearable computer” platform. In ten years, iPod will not be about music, or even videos. It will be the heart of a computer system that a user wears. Separate wireless devices provide the specific functions the user needs, but the iPod provides a centralized and consolidated location for CPU power, color LCD display, data storage, user input (the click wheel), audio feedback, and method of data transfer to PC/Mac. Why make separate stand-alone devices, when the iPod can handle those common functions? Music was just a way to get millions of people to wear the device, like a piece of clothing or jewelry. Once the “platform” is in place (as it is right now), Apple can partner with other companies to create new capabilities where iPod is central component (as it has with Nike).
By the time mainstream investors see this potential, the stock will have split two or three times and still be trading in the 60’s.
Buy your stock now and don’t worry if it goes up or down 5-10 bucks in the near term.. In two years time, AAPL will be at least double the price it is now… We know it better than anyone.
I would have to agree, that fundamentally speaking, Apple is cheap at current prices (mid-60 range.) And they have made all the right moves lately, yet the market is made up of a bunch of folks trading on rumor, emotion and fear. Since the beginning of the year APPL is down somewhere around 15%, and from later January nearly 30% on the year so far. I would take that as a great opportunity for some serious investing if someone wants to look closely at the fundamentals of a companies health, strategies and prospects for continuing success. Hang on when all the screaming fearmongers and sheep run, and buy. Do opposite of what the the crowd’s doing, invest for the long run, and you can’t lose. Don’t stare at, be obsessed with the hourly ticker, unless you’re a day-trader. The value will show itself, and then if you’ve invested wisely, when the bandwagon gets rolling and everyone wants to jump on, you get a free ride to wealth… Now, that’s not pundidtry, that’s just common sense, at least in my book.
If you think Apple is going to release some Good News, wait until afterwards – when the stock tanks. Apple is the only stock I know that fairly reliably does just the opposite of what you’d expect, given the recent news releases. Others have been known to have counter-intuitive moments as well, but Apple stock … it’s just crazy.
I bought at $9 – split-adjusted – and sold at $15 … couldn’t take any more whacko gyrations.
Mike K,
I think you’re right; and I’ve put my last € in AAPL
but I’m a bit worried about Steve Jobs’s health.
Time will tell.
“but I’m a bit worried about Steve Jobs’s health”
Why? Does S.J. have health problems?
Anyway, good press.
“yet the market is made up of a bunch of folks trading on rumor, emotion and fear”
This is so unfortunate and true. It is also a major reason for our current
fuel prices. The trend is even worse with commodities.
Thorin,
yes, I believe so; after having seen photos of him recently.
Not Bill says:”It is the weirdest Damn thing. No good news seems to be enough to lift the stock. New laptops-down. Maybe the Nike deal, small as it is in real market potential will do the trick. I doubt it… It is just very strange.”
What your seeing is the critical eye that’s ebing cast on the Switch itself. Here in Mac-lala-land, everything out of Cupertino is always good-to-great. But people who make money by betting on who’s going to make money typically need to see more than faith. The problem with the Switch is that it has cost the company momentum – in sales, in product rollouts, in R&D resources. It’s also cost all of Apple’s software development partners; Universal Binaries are a great thing, and any Apple dependent software company with an ounce of foresight should have transitioned to it long before this. But most didn’t, and this ‘forced march’ is a much more costly process for all involved. Last, it’s also now clear that the Switch has cost consumers in real dollar terms, with the increase in hardware prices, as well as the not uncommon need to pay for cross/upgraded software.
Yes, the new dual core Intel CPUs are a major step up from what Apple was using before (at least in laptops), so there is some increased value there to offset all the above costs. However, objectivity dictates that real gains are only made in context of other factors: a] Apple’s only real gains are expected in laptops, b] Apple didn’t actually use the best PPC chips they could have, and thus the actual peformance bennies are suspect, c] PPC parts were much cheaper than the Intel equivilents, and d] the corallary effect higher prices have had on Apple’s ‘entry level’ products, with MacBook and MacMini essentially being priced essentially out of their designated role as drivers of consumer adoption/market growth.
It shouldn’t be underestimated just how important that last point is to Wall Street. Apple remaining a niche player when it was dealing with lower production costs, and a sales trend that was very positive anyway – that’s ok. But when the real costs of the Macintel switch are factored in, now a typical investor wants to see what Apple is getting for it’s money. Right now, all it’s been getting is a lot of buzz. iPod’s still doing well, but that’s an old story – a constant. Its the computer side that’s in major flux right now, and this after a banner year of growth (something like 40% in 2004-05). That’s not something any reasonable investor, or investment institution, is going to overlook.
So, in short, what it comes down to is ‘What have you done for me lately?’ And that’s just a fact of life when it comes to stocks. So for AAPL to start doing more than waffling, Apple needs to do more than introduce new sneakers, overpriced boomboxes, and laptops that could have been made without a costly transition. It needs to bring to market what the consumer wants, based on where technological aind cultural trend are going – a home video device primarily – not just what Apple (i.e. Jobs) thinks is cool at the moment.
MDN magic word: “start”
Scary … but need I say more?
in another way –
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“in another way -“
I have no idea where that came from.
“… with MacBook and MacMini essentially being priced essentially out of their designated role as drivers of consumer adoption/market growth.”
should be, “… with MacMini, and MacBook especially, being priced essentially out of their designated role as drivers of consumer adoption/market growth.”
These companies upgrading and making comments about stock prices are simply pathetic. If you had listened to them, they were saying it was a bargain at $85 level. most of them increased the price target to $100 and above.
Right now the shares of APPL cant even remain above $60 without news coming from here and there.
Everytime the stock’s shares go on a free fall, you hear steve jobs doing something to stop the slide, or some other company says something to make a quick profit.
I wouldn’t touch Apple’s stock until there is a free fall and a self-stabilization without some news popping up.
Last time shares were on a free fall to $50’s ( just a couple of months ago ) when the stock hit $58, Steve jobs decided to release “BootCamp” which gave the stock a boost.
Remember, Apple’s shares have come from $7’s just 2 years ago to this $70 level. thats a 10 fold. and what this means is, a lot of people in the not so distant past are in it. They are watching it, when you have so many investors watching it, you should be nervous because the more they watch the share price the more likely they are going to sell.
Don’t believe these rumors, if you can recall, google’s price target was at $500, then $2000, as far as i can tell, Google is headed back to $100 sooner or later simply becauce it is overvalued based on the fact that the company is unsuccessful at everything they do other than search engine, the name ” Google” is a catchy name, they have nothing other than hype. sorta like Sirius.
Speaking of Sirius, take a look at XM’s valuation compared to Sirius, based on that a lone you can tell Sirius has to go down another 50-80% from its current $4/share level just to justify its valuation in comparism to XM . Last i checked Sirius is valued at $5+billion , XM is only 3Billion. which is proof that Sirius has to much hype in it, and So does Apple.
There is a possibility of a stock market crash, since every stock seems to be a bubble, yet here are news claiming things to be “cheap”
There is a clear possibility that all stocks will lose 50% of their value this year. Whats so “cheap” about that.