apple news/media reports

07/14/2005, 9:15am, EDT

Thursday, July 14th

Apple becoming "mass market company"

Apple is becoming a "mass market company" according to Merrill Lynch analyst Steven Milunovich. "The next perceptual change could be investor recognition that the company is building a sustainable consumer franchise." Although the current focus is music, "look for Apple to go after video in the home with an emphasis on high definition," Milunovich said. While Apple remains extremely conservative about its upcoming quarter, the firm projects $3.9 billion in revenue and $0.38 per share. "Company guidance for flat sequential F4Q revenue and down earnings of $0.32 seems too conservative even recognizing a software decline."

Important variations from expectations included:

    (1) higher software
    sales;

    (2) a gross margin 130 bps above guidance thanks to software and lower
    component costs;

    (3) iPod unit sales of 6.2 million versus our 5.5 million
    estimate.


"Mac sales reflected the halo effect though notebooks suffered a tough comparison. Mac sales in total and by product were as we expected. The 24% YoY revenue increase was slower as notebooks grew by only 3% on a tough comparison. Still, Apple grew 3X the overall PC market."

Merrill Lynch reiterated a Buy rating with a price objective of $51 per share.


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the iPod brick wall
0
07/14, 9:51am, EDT
Now, the analysts begin jumping into the game, "hooray for Apple, we love this company, big things ahead." If Apple is able to use the iPod for sustained growth in Mac sales great. Apple should be okay, for a while anyway. But, the iPod's growth will hit a brick wall, when it meets a saturation point. Then, you will see prices plummet, just like they do for every previous commodity item like this (note the price of a Sony Walkman even when it was still the latest portable music technology). In a few years, or less, iPods will range in price from $29 for a flash player to $149 for a mega HD player with color screen. Apple has years and years of a good stream of revenue from this, but Apple cannot survive on this alone. Now, if the iPod gives Apple a halo effect on other products (e.g. home entertainment, etc.), then I'd agree. But that's a huge speculation when the products themselves don't exist yet, as far as we know.
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If you say It Long Enough
0
07/14, 11:09am, EDT
"iPod growth will hit a brick wall". You know, if you say it long enough, it'll eventually be true.....Someday. Like Apple will go out of business.........someday. Of course, we are all still waiting for that to happen. Heck, it may take a few years longer now that Apple is actually "gaining" market share in the "commodity" PC business. And the best selling Mac is actually the priciest consumer desktop Apple makes: the iMac G5. Not the Mac mini or eMac. Go figure. But if you say the sky is falling long enough, it'll eventually be true.........someday.
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milunovich gets it
0
07/14, 11:26am, EDT
The iPod launched Apple into being perceived as something more than a niche boutique computer maker. Now they can leverage the Apple mystique into all kinds of areas. Cell phones, video recording devices, whatever. So long as the products continue to be 'insanely great'. Apple as the next Sony, that's a little far -fetched at this point... but not terribly off the mark.
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3+ Million Macs
0
07/14, 11:28am, EDT
Apple has sold 3+ million Macs so far this Fiscal year (3 quarters, Oct 2004 to June 2005). Not bad for a "niche" company!

I'm thinking/hoping/wishing/praying that Mac sales will skyrocket when the "Intel Inside" models start shipping. We're seeing about 1 to 1.2 Million Macs sold per quarter, I'm thinking 5 Million Macs per quarter may be attainable by the 1st quarter of 2008.
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the end is near
0
07/14, 11:32am, EDT
Some scary stuff when AAPL goes up after a positive quarterly report, normally, paradoxically, it tanks after good earnings. Now I know the end is near...the "analysts" are getting on board.
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so much riding on
0
07/14, 11:52am, EDT
Apple's next great products. I agree somewhat with "the brick wall" comment. You have to believe that more is coming from Apple in terms of cell phone market, HD, etc. Honestly, I think Sony and MS have a huge head start in HD and DVR, which is the next big market, through their next gen consoles. I would have loved to see Apple buy Tivo but maybe their is some other big plan. But at least Apple should partner with Tivo and maybe Sony's PS3. Of course Sony has their own music agenda but to have had a Mac UI and iTunes on a PS3 would be huge. MS and the Xbox 360 is going to be a huge in the "home tech" wars.
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Re: the end is near
0
07/14, 1:53pm, EDT
Glasspusher,

I'm as surprised as you are at the upswing in AAPL today! I figured AAPL would hit $35 or less because that's always what happens.

Guess with all the analysts predicting doom and gloom and being totally wrong (especially after using Creative's sales downswing as a yardstick) may actually have investors waking up to the fact that AAPL might be onto something here!

3 quarters of 1M+ computer sales isn't too shabby either. Maybe if developers start seeing a steady stream of 4.5M+/year computer sales they'll put more resources into OS X software development. :)
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We all know it Glass...
0
07/14, 4:41pm, EDT
That's why I sold 25 shares yesterday, instead of waiting for today - d'oh! Oh well, the difference isn't enough to cry over, glad it wasn't a large sell.

Z
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Analysts...blah
0
07/14, 5:12pm, EDT
Is it just me or Does it seem odd to anybody else that these supposed "Analysts" are wrong more than 50% of the time with their prognostications and totally reactionary when the results don't pan out to their so called "forcasts". And its not just with Apple. Waste of good office and column space, IMHO.

As for the iPod beginning to plateau, it could come next quarter, or maybe the quarter after that. Regardless of when that happens, I would tell anyone else that owns AAPL stock to sell those shares when and only when Steve Jobs leaves the company. While Steve works at Apple, I'm fairly certain APPL stock will do well. That's my 'pod'nostication!
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Analyists
0
07/14, 10:54pm, EDT
Only a few analysts really cover AAPL closely; ML, PJ, etc. Stock went up because for the first time many institutions believe that there is long-term growth potential. The past quarter has seen AAPL as a very good value in the market-- it's a great time to buy.

It still has about 25% growth potential for the year...
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