Morningstar Analyst: Apple Not Exposed To PC Price War

CBS Marketwatch ran a story on PC stocks and the ongoing price war amongst PC manufacturers. That story included an interview with Joe Beaulieu, a senior analyst at Morningstar. The story focuses more on the issues between Dell, Gateway, IBM, HP, and Gateway, but Apple entered the interview at the end. Mr. Beaulieuis main concern is that Dell may (or may not) be cutting support and engineering which will be detrimental to Dellis long term growth. Apple, on the other hand, is not subject to the same pressures and Mr. Beaulieu calls Apple "an interesting play." According to CBS Marketwatch report:

Q. CBS.MW: How should investors play PC stocks?

BEALIEU: Iim a little bit more nervous about Dell now ... just because of the potential that they are going to cut back a bit too far on the support and R&D side.

(But) I think the price looks nice. At $24, thatis a fairly appealing price to me...(Therefore,) Iim torn on Dell. I like the price but I want to know theyire not undermining business long term.

Gateway is a fairly good value, but theyire in the middle of a larger restructuring effort. Theyire closing some of their stores. So that seems still a little bit risky to me.

One interesting play on the PC market might be Apple. Apple doesnit compete with the "clone" PCs like Gateway and Compaq and Dell, and they have a very dedicated customer base. They have been written off for dead several times already and theyive always come back. Theyive shown that they can come up with products that are very compelling to customers.

Theyire not as exposed to the price wars. In a lot of consumersi eyes, a Dell PC and a Compaq PC are substitute goods. But a Dell and an Apple arenit really substitutes for each other.

Q. CBS.MW: Howis Appleis valuation?

BEAULIEU: Itis fairly attractive. Obviously, it was a lot more attractive when it was down at around $19 or so. But given the company has around $11 to $12 per share in cash (serves as a bottom for the price). Theyive returned to profitability, which is very nice. That means theyire not going to be eating away at their cash supply.

Appleis stock closed at 24.57, a loss of 0.39 (-1.56%) on light volume today.

For other stories regarding Appleis stock activity, visit our updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings..