AAPL Stock: 111.31 ( + 0.53 )

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AAPL target raised based on possible Sony partnership

updated 07:10 am EST, Tue February 15, 2005

ML raises AAPL target

Merrill Lynch today raised its 12-month price target on Apple stock to $102 from $85 based on hints of a new collaboration with Sony. In a research note to clients, analyst Steven Milunovich said that Sony President Kunitake Ando's appearance at at Macworld Expo San Francisco in January may foreshadow an upcoming partership between tne companies. Milunovich said that such a partership would help bolster Apple's position in the digital consumer revolution and speculated that it could take the form of an iTunes-like iMovies Store and/or new products based on the recently announced IBM/Sony/Toshiba Cell processor.

"We speculate that an Apple/Sony partnership could take the following forms: (1) an iTunes-like iMovies Store online using the H.264 codec and streaming Sony and Pixar content, (2) a high-performance Apple workstation using Cell for video editing, and (3) a network-centric TV with computing for handling the next-generation of entertainment feeds."

The report indicated that such a partnership was not based on explicit knowledge of Apple future plans but represented "logical conjecture", as Apple tries to expand and evolove its digital lifestyle strategy. "Such offerings, however, would put Apple at the heart of the HD and digital consumer revolution and provide grist for further earnings increases and stock price appreciation."

Milunovich's new price target of $102 is supported by a two-stage discounted earnings model that assumes post-F2006 earnings per share growth of 33% for five years followed by sustained EPS growth of 5% per year, according to the report. The analyst also noted that the stock would have increasing real option value embedded in the stock as the company leverages iPod success into new product lines.

Yesterday, UBS also raised its 12-month price target on Apple stock, citing the upside of Apple's software business and Piper Jaffray maintained an "outperform" rating on Apple.

by MacNN Staff





  1. Meövv

    Joined: Dec 1969



    This means that the G5 Powerbooks are coming!!!

  1. mouseketter

    Joined: Dec 1969


    Some ideas

    Apple could do the networking side of the OS for the Playstation 3. Airport Express on the P23 would be kind of cool.

    Sony could provide their entire movie library to a iTunes like movie download service.

    Apple could work with Sony to develop high end HD video hardware and software.

    Just some ideas :0)

  1. welborn

    Joined: Dec 1969



    In the first paragraph: "hints of a new possible new collaboration"

    (feel free to fix & delete this comment)

  1. bfalchuk

    Joined: Dec 1969


    What about...

    Connect Company was set up with the sole purpose of competing against Apple. How realistic do we think this partnership is?

  1. beb

    Joined: Dec 1969


    Re: Sony

    Sony understands industrial design style. Steve loves Sony's industrial Design style. Sony, like IBM is a slow company in realizing the plainly obvious. An Apple partnership would add quite a bit to Sony's bottom line.

  1. Roehlstation

    Joined: Dec 1969


    Lynch botches it again

    I wouldn't be surprised if Lynch is completely wrong on this, and the sad part is Apple's stock will suffer again for it. These guys are just as bad as AppleInsider for starting bad rumors.

    I do not see a partnership between the two at all, Sony is trying to compete with Apple.

  1. gadgetgav

    Joined: Dec 1969


    Pump & Dump

    Merrill Lynch... the same company that said AAPL wouldn't go above $30...
    There could be something in the works with Sony (hence the Pres @ MacWorld) but I can't see it being something as fundamental to one side as PS3. Apple and Sony compete in the pro video editing market too, so I can't see them co-branding products there either.
    Maybe something using Cell but much more likely an iMovie store. You couldn't do that without Sony being on board.

  1. beeble

    Joined: Dec 1969


    iMovie Store

    They better allow conversion and burn to DVD if they're going to do this. No body has enough hard drive space to store their DVD collection even if compressed with H.264 like you do with iTunes and mp3/aac. Will they include all the info that is on the DVD or just the movie? It won't succeed if they are selling anything less than the same content that is on the DVD because DVDs are so cheap now.

    Maybe if they offered the movie only for $4-5 it would work, but can you see Sony/Universal/WB etc going with $5 a movie download with free burning to disc. I don't! And how can such a small price pay for the bandwidth this thing would consume. They may invent some sort of metering technology but if I've got a 4Mb/sec pipe and I'm only getting a small fraction of that, I'm not going to be happy considering how huge the file is. If you halve the speed on a smallish file and it take 2 min instead of 1 to d/l, no one cares, but when we're taking hundreds of MB, maybe even a few GB per file, then you've got to deliver at very high speeds.

    Frankly, I don't think the internet (especially ISPs) could cope with sudden massive bandwidth use from a consumer movie store with such amazing popularity as it will undoubtedly have. I hope that I'm wrong though!

  1. Jonathan-Tanya

    Joined: Dec 1969



    I like apple, but you know its a whole lot of what-if's, speculation and prayer.

    I'd wait for some real results before moving ahead too much.

    with that said, you should of bought apple a long time ago, so it doesn't hurt now, to do nothing but wait.

  1. marzetta7

    Joined: Dec 1969


    Apple & Sony

    Actually they only thing I see coming more as a possibility between Apple & Sony is the use of Blu-Ray drives and disks in future Apple computer offerings. Don't forget that Sony is part of the Blu-Ray Disc Association which includes 70+ companies (Pioneer, HP, Dell, Panasonic, Philips, TDK, Samsung, etc.) and I think they would like nothing better than to make the future standard of HD Blu-Ray for both the personal computer realm as well as the Hollywood realm. As for the Cell and an online movie store, I just feel those are more of a stretch.

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