updated 09:00 am EDT, Tue June 7, 2005
Merrill Lynch AAPL-Intel
Merrill Lynch today maintained a Buy rating on Apple, with a price objective of $51 per share. Although the stock didn't react favorably after the , that could be due to "hang over left from last week's battery failure lawsuit and higher inventory reports." Analyst Steven Milunovich said some may insist that Apple is "giving up its competitive advantage using IA's." However, Apple's Steve Jobs said, "more than even hardware innovations, the core of the Mac is (still) the operating system." Milunovich also commented on an Intel-based media center, the transition to Intel, and Mac OS X sales.
Apple media center?
The relationship between Apple and Intel could open the door to a low cost TV-based "Mac media center," Merrill Lynch said today. "The new device powered by a more cost-effective chip from Intel could be the way station for digital media such as photos, music, TV, and movies. Apple's new iTunes upgrade includes codec to run MPEG-4 movies and clips."
The Transition: timing is critical
A "tough task" lies ahead for software developers, but Microsoft is ready for the challenge, Merrill said. Jobs said the "catch up is not done yet."
"Thousands of software applications will now have to recompiled to run on both PowerPC and IA Macs, which could turn into a difficult endeavor. Microsoft said its plan to create future versions of Microsoft Office for the Mac that support both PowerPC and Intel processors: timing here is critical."
"Apple's Tiger update doubles our conservative expectations," the investment firm said. Apple announced it expects to deliver over two million copies of Mac OS X version 10.4 "Tiger" by the end of this week, including Macs shipped. "We estimate Apple could pull in almost $150 million from the upgrade in the June quarter, which would add an additional penny to our estimates. We originally expected that only 6.5% of the installed Mac base would upgrade, but that figure now may be in low double digits. We have increased our fiscal 3Q estimate to $0.30."