by , 12:00 PM EST, November 19th, 2003
Two new Death Knells in one week. That hasn't happened in a while, and it may be a sign that Apple is doing better than it has in a long time. Earlier this week, we rang up Apple Death Knell #32, from repeat offender Rob Enderle. We refer, of course, to our Apple Death Knell Counter that chronicles all of the people who have declared Apple to be dead, dying, on in today's case, simply running out of steam.
Banc of America Securities has issued comments to the effect it is concerned that Apple's current momentum is being sustained only by upgrade buying, that the iPod has competition, and that the iTunes Music Store (iTMS) won't add anything to the bottom line. Forbes published the comments in a very brief article:
Apple Computer "runs the risk of generating significant refresh sales to its installed base for the next couple of quarters, and then running out of steam once sales to the installed base are satisfied." The research firm said, "We don't think there is any more creative company in the world than Apple." It also added that Apple's fundamentals are "positive." But Banc of America initiated coverage of Apple at "neutral," saying it was concerned that G5 refresh sales will slow, iTunes won't contribute to the bottom line and iPod is not "the only game in town anymore."
You can find the full article at Forbes' Web site. As of this writing, Apple's stock is trading at 20.30, down 0.02 (-0.10%), on moderate volume of 3,270,008 shares trading hands.
Thanks to the many Observers who wrote in with a heads up on this article.
Talk about a bunch of nervous nellies, though.
The Power Mac G5 has been garnering a lot of attention for Apple, and we strongly think that it will bring new customers to Apple. Indeed, from the Virginia Tech supercomputing cluster made up of G5s, to an increasing array of folks from the IT and *nix worlds, the G5 has already brought in new customers. PowerBooks, too, continue to bring in converts, and Panther is making waves despite a few serious bugs that had to be fixed.
As for the iTMS, we believe that it, too, will help Apple lure in Switchers. Beyond some initial hiccups in the Windows world, iTunes for Windows has met with great success in the Windows world, and that is earning Apple good will. From the get-go we saw articles talking about how the software made sense and "just worked," and a few of those made allusions to wondering if that's how it was in the Mac world. The seed has been planted, and it will bear fruit above and beyond song downloads.
For its part, the iPod continues to rule the roost in the digital music player market. While it does have competition, that competition hasn't changed the fact that the iPod is the #1 player. So where's the doom and gloom?
The Banc of America Securities folks are not coming out of left field with its coverage of AAPL and comments, but the firm is making much ado about little more than worries about what might happen.