Archive for January, 2008
According to NYPost, former US vice-president and current Apple board member Al Gore has exercised an option to buy 1000 Apple shares at $7.48 each. As a part of his contract to sit on the Apple board, Gore was originally given the option to buy 60,000 Apple shares. Gore could make a potential profit of about 7.4 million dollars if he were to buy all 60,000 allotted shares at the reduced price of $7.48 and sell them at current market price of about $131 per share.
Piper Jaffray Analyst Gene Munster writes in a research note to clients on Monday that Apple is “in position to transform the portable music market into a portable computing market”. Munster believes the company will “introduce cheaper, innovative iPods with Wi-Fi and multi-touch technology” in the near future with email and web browsing applications included as well. Munster reasons that due to a significant slowdown in growth of the standalone digital audio player market, Apple has to maintain growth in its iPod business by introducing more functionality within its iPod player. “We believe that the iPod touch is the first of several Internet-connected iPods that Apple is currently developing” say Munster, reiterating his buy rating and $250 price target on Apple stock.
I have some new insight to share with you regarding the portable device Apple is working on. In a previous article, I described the mysterious portable as perhaps Apple’s rival product to the Intel Ultra Mobile PC ( UMPC ) initiative. In talking to several sources close to the secretive project, a few more details have emerged while the actual identity of the device is still shrouded in mystery.
First Some Background
I was first tipped on the existence of plans for a previously unknown Apple portable device, somewhat larger than the current iPhone, a few months ago. The device was described as having a touch screen and best suited to be gripped with both hands. A little later, another source provided a key piece of evidence that pointed to Apple working with the German company Balda on securing 5.2″ touch panels ( more than likely pre-production units ) for an unknown device. This tip was crucial in determining the approximate size of the device and where it best fits in the Apple product lineup. Balda is one of a handful of companies that design and manufacture ( in Xiamen, China) high scratch and shatter resistant, multi-touch capable displays for mobile handsets and is thought to have received orders for Apple iPhone. However, Balda’s financial troubles and its recent sale to KS Plastic Solutions cast doubts on its future as a supplier to Apple. The final contract to produce these panels may be in fact be awarded to Wintek, an Asian component supplier, or Samsung, the electronics giant which also has the multi-touch technology.
What We Know Now
In the previous article, I concluded that the mysterious device could be an ultra-portable Mac and the expectations were that Apple may officially announce its support for the new Intel Silverthorne processor at Macworld ’08 and/or the iPhone SDK may see an early release. Why Silverthorne and the SDK? The new Intel Silverthorne is ideally suited for ultra-portable computing devices such as this one, hence substantially clarifying the purpose of the device. The iPhone SDK would have also provided crucial insight into the capabilities of the present Apple touch-sensitive platform including possible support for larger screens and/or alternative input methods. However neither of these 2 scenarios played out, in fact the release of the iPhone SDK was officially pushed back to the end of February. This prompted me to further inquire to see if there’s a connection between this portable device and the SDK. According to my sources, the new device is more than likely based on Apple’s current portable platform ( ie. iPhone/Touch ) and once the SDK is released, a little digging inside the platform interface should reveal the extent of the platform’s capabilities and Apple’s plans for the portable multi-touch lineup. Moreover, 3G is part of the device specs with WiFi included as well.
What We Can Conclude
Based on what we know to date, the mysterious device resembles less an Ultra Mobile Mac and more an upper model iPhone or a more capable next gen iPod Touch. In other words, the portable’s hardware seem to suggest not a fully capable and portable Mac but a device which depends heavily on wireless connectivity. Likely it’s Apple’s version of the Intel MID ( Mobile Internet Device ) showcased at CES ’08. With the limited wireless sharing of content between machines premiering on the optical drive-less MacBook Air, it wouldn’t surprise me if Apple introduced a device that lets users pull media content from their computers and play on a thin portable client and even run small native apps using the device’s limited resources. Such a device is likely a year from introduction although, due to its 3G capability, may be introduced a full six months before being shipped ( similar to iPhone ) to clear the FCC hurdle.
Fortune-CNN writer Jon Fortt reports while “Apple stock is trading at about $140, 30 percent off its December 28 high of $202.96”, Apple can still “innovate through this downturn” due to 3 main reasons: stability – ( Apple has more than $18 billion in cash giving it a cushion to “take risks” ), iPhone – ( willl continue to sell well ), and iPod Touch – ( as a “wireless computer”, has the potential to come into its own once SDK is released ).
BTW, a number of analysts say Apple ( AAPL ) will make a comeback even in these rough times and most still have a ‘buy’ or ‘strong buy’ rating on the stock, although most have also trimmed their target price by about $35-$40.
Shaw Wu of American Technology Research says in light of the small 5% growth year-over-year for iPods, Apple must significantly increase iPod features in order to avoid “facing cannibalization from cell-phones” and other digital audio players which deliver basic media player functions. In other words, iPods have to differentiate themselves from cell-phones and generic digital audio players by offering more higher end features. AmTech also lowered its ’08-’09 forecasts for Apple annual revenue, earnings per share, and price target.
Despite Apple (AAPL) having a record quarter for earnings, its stock fell sharply in after-hours trading. Apple finished the day trading at $155.64 ( down $-5.72 ), and before earnings were revealed at around 5:00 PM EST, Apple fell by as much as 11% on relatively heavy after-hours volume prompting Piper Jaffray analyst Gene Munster to say “the stock was going down to 130 no matter what results Apple posted”. Munster admits in a telephone interview with Fortune-CNN that “in his five years of covering Apple he’s never seen anything like the market’s reaction to these earnings”. It seems that larger economic concerns are on the minds of investors and until those concerns are put to rest, Apple may not be valued based on its merits. Hopefully cooler heads will prevail tomorrow.
Apple has posted its fiscal Q1’08 results and it’s clearly the best quarter ever for the Cupertino company. Apple sold 2.3 million Macs, 2.3 million iPhones, and 22 million iPods totaling a gross revenue of $9.6 billion and $1.58 billion in net revenue. Revenues for the quarter were up 35% year-over-year. The consensus analysts earnings per share ( EPS ) estimates was $1.63 while Apple handily beat that figure posting $1.76.
Apple, however, guided Wall Street lower for fiscal Q2’08 with revenue of $6.8 billion and earnings of 94 cents a share while analysts were expecting revenue of $6.98 billion and EPS of $1.09. Another disappointment: iPod growth year-over-year was up a mere 5%.