“Apple’s update of the iMac product line this week shows that company is still serious about trying to make money off of desktop computers. But the iMacs, which start at $1,200, aren’t exactly aimed at the mass market,” Jon Fortt blogs for Business 2.0.
MacDailyNews Note: Fortt doesn’t mention that Apple offers the Mac mini with with iLife ’08 and Intel Core 2 Duo starting at US$599.
Fortt continues, “Will Apple’s growth come from desktops? Odds are, no. Laptop sales are growing much faster, particularly among the sophisticated consumers Apple is courting. If Apple can grab market share through laptop sales in the second half of the year, it will be an encouraging sign.”
Fortt writes that Apple could “take the iPhone design, strip out the phone, add video recording capabilities, and call it an ‘iPod camcorder.’ I’d pay a few hundred for one, no question. Will Apple do it? The jury’s out on that one.”
“If the company figures out how to use a successful iPhone to sell more Macs into overseas markets, that growth question will take care of itself,” Fortt writes.
Full article here.
[Thanks to MacDailyNews Reader “Joe Architect” for the heads up.]
whatever this article says, the HUGE drop in value of the AAPL shares is puzzling.
i’m trying to understand what happened, i see a combination of unfounded speculation about iPhone sales, a drop of momentum because nothing as big (and new) as the iPhone is on the horizon, and very bad circumstances that hurt the stock market in general.
but, a drop from 153 (premarket, 1 day after the Q2 report) to 125 is very unexpected, and annoying.
i still think AAPL is going over 160 before the end of the year, and 200 in 2008, but i convinced 2 people to invest in AAPL, and i’m a bit worried, even if i told them that the best moment to sell was the day after the Q2 report, or 6 months later (or after that).
i was expecting AAPL to loose it’s momentum after the iPhone launch, going up and down by 5% or so, then raising when approaching the XMAS season.
the XMAS season will still do AAPL a lot of good, but now it really needs it.
Free advice from analysts proves the adage that you get what you pay for.
<i>”…The difference is, we don’t offer stripped-down, lousy products….” Providing so-so graphic cards is as far as we’ll go to get more sales [ <—MDN MW].
“whatever this article says, the HUGE drop in value of the AAPL shares is puzzling.”
Funny how you see the drop as puzzling rather than the run up in the price as unfounded in reality.
They’re only back to where they were 2-3 months back.
I agree that most of the analysts who write about AAPL are clueless about the company, its market, its prospects, its strategy, and are clueless in general. They are generally IMO, Monday morning armchair quarterbacks, personally incapable of actually building a company into a success. I also believe that there’s tremendous value in listening to ill-informed opinions – especially in the financial markets – providing you do your own homework and form your own well-formed opinions.
There’s a huge difference between Apple (the company) & AAPL (the shares). While I am pretty much an Apple fan (the company designs & produces great products that I buy and use), I recognize that AAPL competes in an entirely different market than Apple.
Apple as an electronics company is rapidly – and rightly – winning over converts (a,k,a, “switchers”); competing with TANGIBLE products against low-end box builders by producing superior user experiences. Hence the accelerating marketshare in computers and smart phones, hence the total domination in MP3 players, and hence the ever-improving business fundamentals affecting the share price.
This brings us to AAPL (the stock) which competes in an entirely different market, largely based on INTANGIBLES. To list a few: general market conditions, contradictory opinions, mindshare, reputation & public perception, seasonality, target market demographics and their on-going ability to buy the products, market & share price manipulations by hedge funds, company guidance (or lack thereof), competitors’ activities, strategic partners’ successes or failures, lawsuits plus the classic greed vs. fear. The last illustrates the point:
a – GREED: you wouldn’t buy an Apple iPod because you think it will make you rich, whereas you would buy AAPL shares for that reason.
b – FEAR: you wouldn’t dump your Apple iPod because you think it will cost you your life savings, whereas you could dump your AAPL shares in a downdraft for that reason.
When it comes to money, I think it’s necessary for AAPL investors to understand that not all other AAPL investors are Apple fans. And that if you only listen to opinions you agree with, you quickly learn – painfully – that other investors/traders are listening to competing (mis)information and that their resulting actions affect the share price. This short-sightedness leads to painful lessons like loading up on AAPL in Jan. 2006 based on great Apple fundamentals and prospects, and riding it down to July 14, 2006 because of those same great Apple fundamentals.
IMO it’s always helpful to listen to what’s being said no matter how moronic and ill-informed, no matter whether you agree or not. You can lose your butt by refusing to listen.
re: Martin
“whatever this article says, the HUGE drop in value of the AAPL shares is puzzling.”
The last week or two has seen huge background dumping of stocks by hedge funds to cover huge trading losses. This has not been affecting just AAPL, but many others as well. Large forced liquidations put selling pressures on stocks and markets in general. AAPL, because it’s so highly liquid, was probably among those being dumped to raise quick cash. Because of selling pressure, market fear & turmoil, credit & liquidity crisis, etc. the price has declined – not due to AAPL’s fundamentals.
“the price has declined – not due to AAPL’s fundamentals.”
Since you’re fundamentals kid of guy, you’ll understand that today (without growth) Apple’s fundamentals don’t support it’s stock price. There’s a huge expectation of growth there.
It has declined due to concerns over Apple’s growth rates. Most of the stock’s value is in future expectations of where Apple will get to.
There was a big run up when there were predictions of up to a million iPhones to be sold in the first two days, and a corresponding decline when much fewer actually were. The new iMac announcement, is so me too that people now have to be concerned about the growth rates in that business.
So in short, Apple was pushed up by unrealistic expectations for the future, and now, as normal when those are not met, is declining.
It probably comes as a shock to the fanboys, who thought they were on a one way elevator ride, to find that Apple behaves just like any other over-hyped stock after all.
@iPhoneSlowdown:
The depth and breadth of the ignorance you display is astounding. I’ve traded AAPL daily for 5 years. Apple’s current growth is around 30% annually, not zero, and it’s accellerating rather than slowing. Apple’s market share is increasing, not declining. The end of July is typically the low point of the year for Apple, and it typically comes close to doubling by January. The iPhone is an exciting new product and there’s been some over-exuberance around it, but it’s by no means a mature product. The few hundred thousand units sold in the last 30 hours of the previous quarter were constrained by AT&T’s activation difficulties, where as many as half the units sold coudn’t be registered until after the close of the quarter. I hope you’re not investing any money based on your notions of what’s going on with Apple these days.
“Apple’s current growth is around 30% annually, not zero, and it’s accellerating rather than slowing. “
Who said it was zero? Contrary to your opinion, earnings growth is slowing. The current price is based on growing at 18% or so every year for the next decade. $150 would require 20% growth every year for a decade, as you can see, small changes in expected growth rates = big changes in stock price. Take a course on company valuation, then get back to me.
“Apple’s market share is increasing, not declining. “
Again, who said it was declining, just not growing as fast as people expected. That means a lower stock price.
Zeke, what you as a “Trader” (if you were actually a trader rather than an AAPL apologist pretending to be a trader) would understand is that the market prices in expectations.
Around the iPhone launch there were very high expecations which were not met.
Even if 50% of phones couldn’t be activated, you still don’t come close to Piper Jaffray’s over-hyped 700,000 iPhones sold number, or the million plus numbers being predicted by others.
Again if you were a trader, you would understand the effect of projected growth rates on company valuations, and the consequences of people changing their opinion about future growth rates.
Alas you don’t so therefore cannot possibly be a trader.
Who said Apple growth was zero? You!
iPhoneSlowDown: “Since you’re fundamentals kid [sic] of guy, you’ll understand that today (without growth) Apple’s fundamentals don’t support it’s stock price.”
“Without growth” now means what? A little growth? Growth but not as much as before?
“CUPERTINO, California—July 25, 2007—Apple® today announced financial results for its fiscal 2007 third quarter ended June 30, 2007. The Company posted revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share. These results compare to revenue of $4.37 billion and net quarterly profit of $472 million, or $.54 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent, up from 30.3 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter’s revenue.
Apple shipped 1,764,000 Macintosh® computers, representing 33 percent growth over the year-ago quarter and exceeding the previous company record for quarterly Mac® shipments by over 150,000. The Company also sold 9,815,000 iPods during the quarter, representing 21 percent growth over the year-ago quarter.
“We’re thrilled to report the highest June quarter revenue and profit in Apple’s history, along with the highest quarterly Mac sales ever,” said Steve Jobs, Apple’s CEO. “iPhone is off to a great start—we hope to sell our one-millionth iPhone by the end of its first full quarter of sales—and our new product pipeline is very strong.”
Apparently neither you nor RealInvestor bothered to read the facts before spewing uninformed opinions. According to your own growth versus valuation formula Apple should be at $275 right now. And RealInvestor, the iPhone is just a side issue. Apple CPU sales (where margins are much higher) will increase 40% y/y by January. That’s why I control as many shares as I can right now. But perhaps it’s easier to naysay and snipe than it is to find the guts to risk real dollars. Money talks. BS walks. Take a hike.
“Who said Apple growth was zero? You!”
Read it again carefully moron, it says the current stock price is not supported without growth therefore the implication is that because the stock price is what it is, and would not be supported by current financials at that level, a lot of growth is currently priced in.
That’s why when people have concerns about future growth, the price drops. But I’m tired of teaching investing basics to the ignorant. Get some financial literacy, then re-read your posts.
“According to your own growth versus valuation formula Apple should be at $275 right now.”
About that, but only if you believe that growth will continue unabated for 10 years.
That would give Apple revenues in the 300 billion dollar range, or about 15x what they are now. How do you get there? Easy, sell 15x as many PCs, iPods and iPhones as Apple sells today. Sure that sounds reasonable, say 75% of the US PC market, 750 million iPods a year, and lets say 150 million iPhones.
Likely? Not really.
Perhaps you think you understand financials and perhaps you do have a basic understanding of stock pricing, but your models do not apply to AAPL. I’ve invested in AAPL common stock and options for 5 years now, with an average annual return of 300%. Who’s the moron?
I’d say that if AAPL’s current growth rate dictates a stock price of $275, but it now sits at $125 then it’s significantly discounted to reflect slower growth in the future already. Whether that growth actually slows is another question. You cite the current product lineup and extrapolate required growth in those products to justify your pessimism. Limiting your thinking to those existing products is a poor assumption and it is why your models don’t apply to AAPL. Five years ago the iPod, iPhone, and AppleTV did not exist. Five years or ten years from now will Apple have invented anything else? Will there be new and unthought of products fueling growth in areas we can’t even imagine? Your thinking is that of the conventional stock technician, without vision. I can read all of that I want in any financial section of the newspaper every day. There’s a reason why those writers make their livings writing about investing, instead of investing. There’s a reason my barber is a barber and not an investment banker. I don’t follow stock advice from my barber for the same reason I don’t base my investment decisions on the opinions of people who only talk about investing. Free advice is usually worth about what you pay for it.
“I’ve invested in AAPL common stock and options for 5 years now, with an average annual return of 300%. Who’s the moron?”
You.
When was the last time Apple introduced a new high potential product before the iPhone? hint, about six years ago, the iPod, and the Mac 17 years before that. They’re currently averaging about one successful new product idea per decade.
“it now sits at $125 then it’s significantly discounted to reflect slower growth in the future already. “
Correct, about 18% compounded year on year, which is still a high growth rate over that long a time. And that still requires that they become a company with about 115 billion revenue.
More likey? Sure. Very likely? You tell me.
“with an average annual return of 300%. Who’s the moron?”
Clearly not you, if you started with even a modest $10,000 you have over 10 million in gains now at 300% compounded annualized return. Congratulations.
You’ve forgotten about Apple’s most important innovation in the last 10 years…OS X. It is OS X that will eventually kill Microsoft, and it’s OS X that allows development of items like the iPod. The iPod is only the most VISIBLE new product.
I started with much less than $10,000, laughably less, as a matter of fact, and I’ve taken out enough to pay for a private university education along the way, as well as miscellaneous lifestyle improvements. So while I don’t have $10M I am doing very well indeed. How many naysayers have such a track record? No optimism, no risk taking. No risk, no gain. It’s only money, after all.
“taken out enough to pay for a private university education along the way,”
That’s chump change, a couple of hundred thousand at most. What happened to all the rest?