Analysts see vast opportunity in Apple’s Mac story

“Now might be a good time to put the Apple back into the investor’s cart,” Duncan Martell reports for Reuters. “Apple Computer Inc., rejuvenated by its invention of the market-leading iPod more than four years ago, on Wednesday posted a 48 percent surge in quarterly net income, fueled in large part by surging notebook computer sales.”

Martell reports, “Revenue from the sales of MacBook and MacBook pro notebooks jumped 61 percent to $1.16 billion from the year-ago quarter, a faster pace of growth than the 35 percent rise in sales of iPod digital music players to $1.50 billion. ‘It shows the importance of the notebook line in their business and the diversity of their product set,’ analyst Shannon Cross of Cross Research said of the rapid notebook growth. ‘People are looking more at the Mac story and that’s where the vast opportunity really lies.'”

“With more than 75 percent of the U.S. market for digital music players, there’s limited room for growth in iPod market share. So to keep growing Apple needs to ensure that consumers who don’t yet have a digital music player buy an iPod,” Martell reports.

“Where there is vastly more room for growth is in its ‘original’ business, selling the Macintosh computers that are known for their sleek industrial design, ease of use, and robust package of software that comes included with each computer,” Martell reports.

“Apple ended the second quarter with 4.8 percent of the U.S. notebook and desktop computer market, up from a 4.4 percent share a year ago, according to IDC figures. That’s still well below the 34 percent share that Dell Inc. commands and the 20 percent that Hewlett-Packard has chalked up,” Martell reports.

“Apple Chief Financial Officer Peter Oppenheimer cited market research firm NPD’s figures that showed Apple doubling its U.S. notebook market share as measured by units to 12 percent in June from 6 percent in January,” Martell reports. “‘We are increasingly optimistic about the potential for Mac to gain meaningful share in the back-to-school and holiday seasons while Microsoft Vista remains unavailable until January,’ wrote Merrill Lynch analyst Richard Farmer in a note to clients on Thursday.”

Full article here.

Related articles:
The Mac is back: Rising Macintosh sales give more momentum to Apple – July 20, 2006
Citigroup sees Apple shares as compelling ‘Buy’ even on today’s strength – July 20, 2006
50% of Apple Retail Store customers are ‘new to Mac’ – July 20, 2006
Merrill Lynch ups Apple rating to ‘buy’; UBS raises Apple target to $80 – July 20, 2006
Apple shares rocket over 12% in pre-market trading on strong earnings report – July 20, 2006
‘Fantastic quarter’ helps Apple double share of U.S. retail notebook market to 12% – July 19, 2006
IDC: Apple Mac attained 4.8% U.S. market share in Q2 06 – July 19, 2006
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Apple Q3 2006 Conference Call notes – July 19, 2006
Apple reports third quarter results: $0.54 per share on $4.37 billion in revenue – July 19, 2006

31 Comments

  1. JohnE:

    I agree. I accept that much of the demand for the new laptops is pent up demand from the PowerBook days, but there are a large number of other markets who are now delaying:
    • schools waiting for the holiday season to install new labs or sign new contracts
    • those delaying iPod purchases until the true move vPod is here
    • those delaying purchasing Mac Pros until Adobe and Intel make their releases
    • those delaying server upgrades until the X-Servers are MacIntel
    • those delaying notebook purchases until a 12″ sub-notebook appears
    • those waiting for any box until after Leopard appears, to save $100
    • those cranky each time they realise their Win 98/ME is no longer supported over the phone, XP wont run on their box, the kid next door runs wireless on his Mac without the problems, they realise iLife and PhotoBooth are not available for Windows, XP’s registrations assumes you are ‘guilty until proven innocent’ and Vista already has viruses.
    • Apple becomes the ‘Plays for Sure’ for software running all Mac, windows, Linux, etc. software, a feature no others, even MS, can match.

    There are so many waves of demand pent up, yet sales are already up a few decimal points. Sales breed more sales as friends get the same box that their friends get.

    Once the consumer and graphics markets gets saturated, there is the education market to take back from Dell, the scientific market to tie up, the small business market, the SOHO market, the perpetual traveller market, the film production & photography markets to win, and finally the corporate market. The war has just begun.

  2. Apple will never catch on like everyone hopes it will. it simply wont. Microsoft is to powerful, it will hire necessary people to re-design the next Windows OS.

    you guys really believe sony and dell are just sitting there and watching? i bet they are already working their own OS to compete against Apple.

    in terms of the stock AAPL, also pure hype, only reason people paying $60 for the stock is because they are thinking ” oh my gosh, the stock was $85 in january, it might go back there and i will make money “

    yet we all know $85 was never a true value for AAPL. if it was, it wouldnt have slided that much.

    anyone remembers boot camp news? it took AAPL from $58 to $73 in an instant. sorta like right now.

    People are not even reading the reports closely, everyone was expecting $4.4 to 5+billion in revenues, AAPL did not even come close to that level.

    they simply avoided advertisement to put their money into the “earnings per share” column.

    I sold all my shares at $61 and if the stock goes above $65, i will be shorting on it because it’d be a very safe level to go short on it at least in the near term. simply because the laws of physics apply to everything. go to high to quickly and you got some “leveling out” todo.

    btw if the stock falls below $60 again, it might result in another chain reaction, it did trigger that today as well, ( briefly fell under $60 )

  3. Sirius:

    “Apple will never catch on like everyone hopes it will. it simply wont. Microsoft is to powerful, it will hire necessary people to re-design the next Windows OS.”

    Uh, yeah, like that’s really worked well for them these past three years. Think about it. After three years of intensive effort with fire under their feet and rabid squirrels in their shorts, the best they can manage is Service Pack 3. NOBODY is impressed with this, not even Windows fanboys. Money does not equal talent.

    “you guys really believe sony and dell are just sitting there and watching? i bet they are already working their own OS to compete against Apple.”

    No, I think they’re sweating. Sony and Dell building an OS? Are you hallucinating? Dell can barely build boxes. And Sony’s forays into the world of software have been pathetic. Sony Connect, anyone? You can’t be serious.

    Somehow, I get the feeling that your main computer is an Xbox.

  4. I’m with you, Hype. Things never change. That’s pretty clear. I mean, I can’t wait to pick up my next shipment from the British East India Company o’er here in Boston Harbor…

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  5. Nobody discusses how iPod sales have dropped the last two quarters. That fantastic growth is no longer there. iPod is the profit machine for Apple.

    Apple computer sales only nudged up 10% in market share. Not really that impressive.

    The stock will drop a couple of bucks on Friday.

  6. “Hype just like Sirius” is, in fact, “Mac Realist.” He purports to know EVERYTHING about the market and Apple’s position therein, but he is just an a**hole losing his pucker.

    Even under this different name, he’s still using that “everyone” moniker to affirm Apple’s shortfall in the gross revenue column. “Hype,” you’ve been told before that “ANAL” is the first word in “analyst,” and yet you insist that “everyone” is disappointed in the supposed $30 million deficit from ANALysts’ insipid guestimates. THEY’RE NOT, genius!

    The FACT, jerkwad, is that Apple’s gross revenues are 47% higher than this quarter last year–and the second highest in the company’s history. CAN YOU UNDERSTAND THAT, YOU FSKING IDIOT? MonkeySoft’s revenues dropped like a rock this quarter, and only their promise to buy back a crapload of stock has buoyed the MSFT price in after-hours trading. A bribe by any other name . . . .

    Witness:

    “Microsoft Corp. said Thursday that fiscal fourth-quarter earnings fell nearly 24 percent in part because of a one-time legal charge but still beat Wall Street estimates.”

    Do you have enough brain cells left to see what’s going on here, moron? The truth is that you have no more insight here into the ephemeral future than another other supposed “ANALyst,” so grab your blankie and go reformat your hard drive for the umpteenth time this mmonth like every other MonkeySoftie.

    (Live for FACTS, Hype, not WISHES. They’re much more reliable.)

  7. Hype like Sirius,

    Comparing Apple to Sirius? Irrelevant.

    Dell and Sony build boxes. Any OS by any company but Apple or MS; irrelevant. Apple controls their own destiny now.

    What Microsoft does is almost irrelevant to Apple’s market. MS has no where to go but down.

    Analyst’s opinion of Apple: irrelevant.

    APPL stock price: irrelevant.

    Your self-important opinion of the stock price: less than irrelevant.

    Market demand for Apple products is the only relevant factor.

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