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First on TMO - Analyst Reiterates Apple to Make Flash-Based Player; SigmaTel Stocks Soars
by , 4:45 PM EDT, October 20th, 2004
Following the report of strong third quarter earnings Tuesday, Thomas Weisel market analyst Jason Pflaum reiterated to clients Wednesday his confidence that semiconductor maker SigmaTel will supply chips for a flash-based music player from Apple Computer that will be released before Christmas.
In an interview with The Mac Observer, Mr. Pflaum cited various sources in Asia for his continued confidence that Apple will release a flash-based player.
"I recently spent two weeks in Asia meeting with a number of folks who are in a position to know details of SigmaTel's supply chain," he said in an exclusive interview with TMO. "Based on our industry contacts, we are confident that one, Apple is planning to launch a flash-based player, and two, SigmaTel is the provider of controller chip for that device.
"Apple's entry (into the flash-based player market) could upset the OEM (original equipment manufacturing) apple cart as the first true 'branded' entrant," he wrote to clients in a report obtained independently by TMO.
Mr. Pflaum is estimating such a manufacturing deal with Apple could be a US$2 to $4 million revenue opportunity for SigmaTel. "The forecast is conservative at best," he told TMO. He said SigmaTel is prepared to meet whatever the demand Apple throws at them to make a new flash-based player. SigmaTel does not manufacturer its own chips, but outsources production to companies in Asia.
Mr. Pflaum believes the product is already in production and will be released by Apple for the Christmas buying season.
"It's a very tight supply chain, but I think this product from Apple will come out by the end of the year," he said. "That could obviously change, but we're pretty confident this will happen and you'll see product on the shelves in December."
SigmaTel officials refused comment on the report. It is Apple's policy to not comment on product strategy.
The SigmaTel-made controller is basically a 'system-on-a-chip' solution that acts as the brains of a flash-based device. Unlike Apple's hugely popular iPod and iPod mini players, the new player would presumably use solid-state flash memory, which has less capacity than hard drive-based players but can make for a lighter and cheaper player.
Mr. Pflaum said SigmaTel is currently the market leader is providing controller chips to flash-based MP3 players worldwide, with a 65% market share.
Sigmatel shares leaped Wednesday, after the semiconductor company surpassed earnings expectations for the third quarter. Excluding items, SigmaTel, based in Austin, Texas, reported earnings of US37 cents a share, which was well above projected earnings of 29 cents a share that had been forecast, on average, in a Thomson First Call survey of analysts.
Shares of SigmaTel (SGTL) closed Wednesday at $28.23, up $4.80, or 20.49%, on volume of 5.3 million shares.
Lending further credance to reports of a flash-based Apple player this quarter is the SigmaTel estimate of a fourth-quarter profit of between 35 cents and 40 cents a share, on revenue of between $55 million and $60 million. Analysts were expecting a profit of 30 cents a share on $44.9 million in revenue.
Thomas Weisel has an investment banking relationship with SigmaTel. Mr. Pflaum does not cover Apple Computer as an analyst for Thomas Weisel.
Observer Comments
Wed Oct 20, 2004 5:53 pm Subject: Better hold onto my Apple stock
Just wished I had bought more at $14.85!
This could really blow the market apart if there is sufficient inventory to even partially meet demand. Can you hear the moans in various board rooms and CEO office when they just THINK about it? The potential volume for a flash based iPod is probably 2 - 3 million for the Christmas buying season. Hope the factories are going 24 hours a day!
10 Mpixel phone-camera big risk for Apple … !?!?!?
Where do they put the CCD ? in an accessory case ?
And to think I just invested in a Canon EOS Rebel a few months ago !
But yet, I’m glad I haven’t bought an iPod yet, so I can get this wonder phone from Samsung (and a sackful of their 32 MB “accessory cards” to accommodate the pictures I might take-2 cards per picture or something like that ?)
Now who gets the 92 MB on-board memory ? the iPod-killer MP3 player or the MPA/QT video ?
All in all, a pretty weird article from Yahoo-UK … but thanks, anyway, Guest.
Wed Oct 20, 2004 8:30 pm Subject:
Wed Oct 20, 2004 9:09 pm Subject: Remember Steve's RDF That Flash Players Are Too Small
Wed Oct 20, 2004 10:44 pm Subject: Re: Remember Steve's RDF That Flash Players Are Too Small
QuoteRealityCheck wrote:
It wasn't that long ago when Steve Jobs told the Mac faithful that customers really don't want a player that holds less than a 1000 songs.
6 million hard drive-based iPods later, Steve Jobs is right
For the few who would prefer a smaller capacity product, Apple is more than happy to meet their need.
Thu Oct 21, 2004 1:15 am Subject: Bad Steve!
QuoteRealityCheck wrote:
It wasn't that long ago when Steve Jobs told the Mac faithful that customers really don't want a player that holds less than a 1000 songs. The RDF was that customers don't want to manage what songs to put on their players. Of course now that Apple is making a flash player song capacity is no longer a problem. Wonder why Mac zealots have such a bad reputation.
That dastardly Steve Jobs! If customers have in fact stated a desire for a player that holds less than 1000 songs, he's got some nerve listening to them! Although it seems the flash technology is at a point where you can get a 4 GB module, same size as the iPod mini.
As for those darn zealots, I'd agree that those of any stripe give a platform a bad name. RC has done wonders for the reputation of Windows fanboys everywhere.
QuoteLOL thats one of the funniest posts anyone has made in a long time.Guest wrote:
The going could get rough in the next couple quarters.
http://uk.news.yahoo.com/041020/323/f4wod.html
Thu Oct 21, 2004 11:54 am Subject: I'm liking this idea more and more.
iPod Micro- a 1-2 GB flash based music system about the size of a business card. It holds 250-500 songs. It comes with earbuds, FW cable, "micro-dock" and an armband for carry at the gym or while you are out running. Priced at $100-149.00. If we see something along these lines, we might be looking at at Rio/Lyra killer.
What is to keep Apple from using two 2 gig chips? Results in a 4 gig micro and puts pressure of the memory makers to come to the party in the future. Lets you have both 2 and 4 gig versions and price points. 2 gigs, by the way, would handle a lot of users who don't want to have a large pile of CDs in at one time.
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