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TMO Reports - Analyst: Apple Working on 2nd Cell Phone, Red Nano Selling Well
by , 1:45 PM EST, November 20th, 2006
American Technology Research analyst Shaw Wu on Monday issued a report detailing his belief that Apple is working on a second iTunes cell phone, as well as his thoughts on sales of the new red iPod nano. Of the second cell phone, he wrote: "We are picking up that AAPL is working on a second in-house iTunes cell phone that will also feature 'messaging' capabilities. We believe it will focus initially on mobile IM as opposed to e-mail. From our understanding, it will leverage off existing iChat software that runs on MacsWe believe this product is AAPL's 'smart phone' and could be branded as 'iChat mobile.'"
As for Apple's first iTunes cell phone, which has yet to see the light of day, Mr. Wu said that he "remain[s] uncertain on the exact timing ... We believe its 'go-to-market' strategy continues to be the gating factor (MVNO [mobile virtual network operator] vs. traditional carrier or both). However, we believe we are closer to resolution and our conviction remains high that AAPL's first cell phone will be released in 2007 -- potentially 1H07."
Apple had also been long-rumored to be preparing to join U2 front-man Bono's Project RED, which benefits AIDS research. The company finally signed up to the cause with the release last month of red 4GB and 8GB iPod nanos. Mr. Wu said that his sources indicate that the new MP3 players "are selling well." He currently expects Apple to sell 14 million iPods this quarter, "but given RED nano momentum, we believe our forecast will likely turn out conservative."
Looking beyond December, the analyst explained: "While AAPL shares have appreciated significantly in recent months, we continue to believe shares still have sizable upside ahead of MacWorld Expo in January 2007. We see several catalysts over the next few quarters including: Mac OS X Leopard in 1H07 that should help maintain strong Mac momentum, iTV launch in 1Q07, movie content partners beyond Disney, new iPod features including widescreen and wireless Bluetooth capability, and cell phones in 2007."
Mr. Wu reiterated his "Buy" rating on Apple's stock, with a US$92 price target. At 1:47 PM EST on Monday, the company's shares were selling for $86.62, up 0.9% for the day.
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Mon Nov 20, 2006 6:51 pm Subject: The role of analysts
Many tend to forget on these forums why analysts have jobs. There is a strong demand for this profession and they make very, very decent living. This is because ordinarly people with lots of money to invest cannot possibly know everything about every company. They hire analysts to research the past performance, study their product lines, try to guess their future plans and provide (reasonably accurate) predictions about the future of stock value of these companies. Analysts don't report news. That is done by news reporters (a.k.a journalists). Analysts analyse and predict (to many, this is akin to pulling information out of one's arse).
Shaw Wu (together with Gene Munster and others who follow AAPL) seems to be rather competent and often quite accurate in his observations. Again; he is not a reporter; he tries to predict what AAPL will be doing in the future.
I haven't forgotten that analysts have a niche to fill. But when it comes to Apple, it appears many analysts' "research" involves reading the rumors sites, which have a few hits, but many, many misses.
As Guest pointed out above, this "true video iPod" is something that both analysis and the rumors sites have been "predicting" for over a year now. The iPhone is another favorite. If either of these ever do come out, the analysts will pat themselves on the back, claiming they predicted it, but conveniently ignoring the fact that they were wrong quarter after quarter.
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