There's nothing new. Don't tell me that a flash music player is innovation, and please downloading music to wireless phones is old news in Europe and Japan.

Apple's famed R&D is smoke and mirrors, Jobs is copying technology and using his RDF to trick iLemmings into thinking it's something new. Looks like Piper Jaffray has fallen under the influence of the RDF as well.

My prediction (raise your hand if you're sick of hearing this) is that Apple will NOT release a flash-based iPod. As a result, there will be a knee-jerk sell-off of Apple stock, resulting in a drop of at least 10%. The stock will soon partially rebound, trading below $60 for several months or longer. The stock won't see any significant upwards movement until, and unless, the Mac market share increases. $100 a share won't be seen until at least two years out, but the Mac--and AAPL--will see a gradual resurgence, but nothing like the recent run up.

So, either the analysts or I will have some crow to eat come January.

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RealityCheck wrote:
There's nothing new. Don't tell me that a flash music player is innovation, and please downloading music to wireless phones is old news in Europe and Japan.

Apple's famed R&D is smoke and mirrors, Jobs is copying technology and using his RDF to trick iLemmings into thinking it's something new. Looks like Piper Jaffray has fallen under the influence of the RDF as well.

The innovation is that Apple does it better than anybody else, and makes people actually want to use a technology: Witness the iPod, the iTunes Music Store, the iMac G5: all of these are based off of existing technology or designs (hard-drive based music players, digital music purchases, all-in-one flat-panel designs), but everyone who tried to do those before met only limited success. Apple truly "gets it," and you would, too, if you stopped being so stubborn and actually gave their products a try. And here's the kicker: you'd actually enjoy it, and maybe wind up a little less bitter, to boot.

Innovation is not synonymous with invention, nor does it mean doing something first. The most successful innovators (both in terms of profit and mind share) are frequently those that take existing inventions and package them in such a way that results in products that are approachable and intuitive to the matches. That is Apple's modus operandi in a nutshell.

Innovation is not by any definition the same as the word INVENTION or INVENTOR.

Most things are inspired by something else - without a horse and cart, there would not be the inspiration for an automobile ... and you don't have to be an inventor to be innovative. Henry Ford made the automotive industry what it is today - before him, cars were assembled by hands and very expensive. Design wise or even technology-wise, the Model T was no better than the other cars on the road but it was about 20% the cost of most cars - and even his assembly methods were perfected hundreds of years ago in England and even in the US for gun assembly ... but it is innovative to take what's out there and apply it - that's exactly the ipod.

I had an early mp3 player - it weighed nearly 5 lbs and you had to put your files into FOLDERS marked 01_Folder, 02_Folder - to this company - hey, it's our product - you figure out how to use it - what Apple figured out is that it's not a portable HDD that happens to play audio files but rather, it should be a device for music lovers that also happens to be a portable HDD - to an engineer, that's too fine of a distinction but to average users, it's not night and day but night and two weeks ago.

How about software and hardware combo that actually is smart enough to realize the device is plugged in? Software that is easy to use - how about a store that is built around the user and NOT because their web designer fulfilled his/her minimal contract? Again, nothing that wasn't already out there but better than everything - that's innovation.

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jimothy wrote:


So, either the analysts or I will have some crow to eat come January.

How would you like the crow prepared? Raw or well done?

I agree with DawnTreader.

I'm no analyst either, and i'm not sure what they really do, other than comment on things and watch stock tickers move [seems like more of an ego thing than anything else ], but I'd bet Apple's stock price will go up because Apple's revenues will continue to go up. Nothing Apple releases makes their stock price go up much unless it will bring them more profit.

Given an article several months back regarding the breakdown of where the 99 cents goes from every purchase, they said Apple gets 4 cents [there were approximately 25 cents unaccounted for]. If Apple gets 4 cents and they just sold another 4 million iPods last quarter [does that include the hPods?], then I would have to say that on average [and you can figure it out better if you just look at how many iPods have been sold to date and how many downloads from the iTunes music store have been made] and on average, people buy one song a week, then that adds an exra 2 million profit to Apples bottom line next year.

Looking at it from a different angle, it will add more. As name recognition and word of mouth grow, so will iPod, iTunes, and Mac systems sales.

But, I'll join in on the crow eating with you.
My prediction. Apple's share price [AAPL] will hit $180 a share or more in the next 18 months.

[Don't forget, year over year growth in the server market. If they keep that, they will become a significant player in servers. Apple is using Apple servers to serve their content. Apple has a lot more going for them than most look at. As new people switch, they are new OS buyers, FCP buyers...]

You can buy some Puts on Apple or sell their stock short.
As for me, I'd buy LEAPS. Lots of them.

AAPL trading at ~30x P/E
Maintaining same P/E...
AAPL revenues go up $1
AAPL stock goes up $30
ROTFL

But the music industry did "get it" when Steve J discussed how to do legal music downloads.

Customers have been able to "get it" in very rapidly growing numbers.

Wall Street has been able to "get it" - though they were a bit slow.

Only RC and MS seem to be lost these days.

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Anonymous wrote:


My prediction. Apple's share price [AAPL] will hit $180 a share or more in the next 18 months.

[Don't forget, year over year growth in the server market. If they keep that, they will become a significant player in servers. Apple is using Apple servers to serve their content. Apple has a lot more going for them than most look at. As new people switch, they are new OS buyers, FCP buyers...]

You can buy some Puts on Apple or sell their stock short.
As for me, I'd buy LEAPS. Lots of them.

AAPL trading at ~30x P/E
Maintaining same P/E...
AAPL revenues go up $1
AAPL stock goes up $30
ROTFL

IMHO Apple has already been richly rewarded for the success of the iPod. I can see $100 per share in 12 twelve months if the halo effect lifts CPU sales more than 25%. But I don't see $180 in this market.

Jimonthy will have to eat crow for sure. From a business perspective, Apple need to compete in the low cost (below $200) 35% in US (49% globally) that are not using current hard-disk based iPods. To go below $200, only CF fits the bill.

Guess's estimate that AAPL will hit $180 within 18 months is possible because:
- Sale of iPod is exploding. Analysts underestimate the rate of increase.
- CPU sales will increase by more than 25% (sorry Dawn). Halo effect is about 10-15% not 6%.
- Apple will release killer devices/apps in MacWorld SF and in late summer/Fall 05.
- QuickTime will open a new revenue stream for Apple. Solid evidence of this will emerge around second half of 05.

I really do think it is time for this poster change his moniker. There is really only so far that irony can take you. And if it isn't irony the ignorance of his basic subject matter reallygoes well beyond the joke implied by those words.

Reports indicate Apple is paying $65 U.S. for each player delivered to them by Austek (the company making them for Apple). There may be smoke and mirrors but the fact is that Apple is selling more hard disk players because they are, simply, better and easier to use. Apple's Flash player is going to be the same. Easier to use and more appealing. There are those who'll never give Apple credit because they are myopic. You don't have to be the first in the marketplace. Apple certainly wasn't, but they are the leader.

One certainly hopes the new mini's will not be "bigger". I guess Mr. Munster meant "larger capacity hard drive". Hell, even analysts have trouble expressing themselves properly and using terminology correctly.

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Guest wrote:
You can buy some Puts on Apple or sell their stock short.
As for me, I'd buy LEAPS. Lots of them.

AAPL trading at ~30x P/E
Maintaining same P/E...
AAPL revenues go up $1
AAPL stock goes up $30

I'm not confident enough that AAPL will go down to sell short. Likewise, I'm not confident enough that it won't go down in the short term to buy. But the analysts are painting such a rosy picture that if Apple misses on a single point--say, selling only 3.8 million iPods or not releasing a flash iPod--the stock stands to take a major short term hit. This short term hit would be little more justified than the recent short term run-up; Apple looks like a long-term value, but its present valuation has reached precarious heights on speculation of future success.

Also, regarding your P/E numbers, Apple's earnings, not revenue, would need to increase by $1 per share for their stock price to increase by $30 (assuming constant P/E). And that represent over $400 million in additional earnings, which is a huge increase.

Also note that Apple's P/E for the trailing twelve months is close to 90, not 30 (which is itself a very high P/E). Thirty is the expected forward P/E for fiscal 2006. If the stock price were to remain flat, they'd have to increase earnings per share by three times, to $2.10. To reach your $180 target, earnings would have to reach $6 per share, or over $2.4 billion (neglecting dilution through stock options). Based on their TTM net operating margin of 3.94%, they'd need over $60 billion in revenue. For comparison, that's 27% higher than Dell's revenue last year.

Now, do you expect Apple to increase sales by nearly seven times in the next 12-18 months, and still maintain a rosy growth outlook to justify a P/E of 30? If so, buy away and hand me my fork and knife. But as great of a company as I think Apple is, and as good as their growth prospects could turn out, I think it's crazy to assume they'll grow that much that quickly.

Apple's stock is getting harder to understand because there are more factors involved than a few years ago, including the iPod. I believe that there is another hidden factor involved in this year's rise: the falling reputation of MS in terms of being able to deliver a safe, reliable OS. SP2 hasn't done the trick and Longhorn probably won't either.

The failures of MS are gong to support the increased sales of "other" OS platforms, including Linux and OSX. The success of Firefox is a good indication that people are more than unhappy with Windows, especially IE, and are prepared to look at something besides MS. Bad news for MS and god news for Apple.

While Linux may well gain more strength in the business world Apple will also benefit, especially in their server areas. Linux, however, isn't ready for the home or small business markets like the Mac is and I see strength there.

2004 may well go down as the turning point for MS. People no longer consider it the Holy Grail and, when they take the time to look at it, the Mac is very impressive. One key is that there is been a huge amount written about Apple this year and people are starting to look seriously at Macs, with about half the visitors to Apple Stores being Windows users.

A good part of the switchers over the next few years will be pulled in by the iPod - the rest will be pushed in by MS. Add to that the huge potential of a flash iPod and Apple is facing another year where it will be difficult for them to supply the demand that is developing.

Short term profits? When the flash iPod is announced order a few on day one and sell them on ebay when they arrive - there should be a nice little profit there.