Analysts: Apple’s Stock Growth Depends On Increasing Market Share

C BS Marketwatch has published a very interesting report from Deborah Adamson about Apple. The article, titled "Apple counts on stores to boost sales," mainly focuses on the impact and importance of Appleis retail store strategy on increasing the companyis market share. From the report:

"The retail strategy could help them gain market share over the next few years," said Joseph Beaulieu, an analyst at Morningstar. If Apple succeeds at nudging up its share to even just 6 percent, that 20 percent jump could give its stock price a good boost, he said.

Indeed, A.G. Edwards goes so far as to posit in a research note that "this is one of the most opportune times Apple has had in many years to gain market share," thanks to its product offerings, improved sales channel and the stagnation of the Windows platform.

The problem, according to the article, is that Appleis stock hasnit performed in keeping with the rest of the tech sector for the last 15 years:

"For 15 years, investors have owned the stock at the same price," said John Bollinger, president of EquityTrader.com and creator of the Bollinger bands technical indicator. "This is shameful. ...You need a fundamental change in the companyis business plan."

In contrast, rival Dell Computer traded at a split-adjusted 10 cents a share in 1988. It closed at $26.34 Tuesday. Even problem-plagued Compaq rewarded its shareholders better: It was $1 in 1987, adjusted for splits, and $10.15 on Tuesday.

What made the difference? Market-share growth.

After hitting a high of 16 percent way back in 1986, Appleis U.S. market steadily declined to around 5 percent, where it has resided since 1997, according to IDC. Thatis even less than struggling Gateway Computer has now. Worldwide, Appleis share has shriveled to less than 3 percent from a one-time peak of more than 9 percent. And while the stock participated in the Net boom along with everyone else, it has since settled back to its 1987 levels.

The article also discusses some of the companyis nay-sayers, including mistakes made in the past, and some of what some analysts think are Steve Jobsi quirks.

[Bruce Lupatkin, general partner at North Bay Technology Partners, a money management firm that specializes in tech stocks.], however, thinks too much time has been lost. "Apple is a great consumer icon" but it didnit capitalize fully on that brand awareness into becoming a consumer electronics behemoth, Lupatkin said. "Apple could have been Sony 10 years ago."

Apple also could have been king of the computer market, if Apple cofounder Steve Jobs hadnit make the error of refusing to license its superior platform, said Roger Kay, director of client computing at IDC. "Heis revolutionary, but heis also dyed in the wool; he has certain strong opinions about things," Kay said.

Jobsi refusal was the turning point that made Wintel, and Microsoft in particular, kings of the computer world, he said. Kay added that, by some estimates, the mistake in strategy cost Apple $500 billion in lost revenue.

More than that, the move "cost the entire game," Kay said.

There is a lot more information about Apple, the companyis stock, and some of the issues that are effecting the stock in the full article. We recommend it as an interesting read.