Posted on 03/08/2008 6:38:32 AM PST by jdm
Bear Stearns analysts Andy Neff, Bill Hand and Ted Chung sent a note to clients this morning following Apple's (AAPL) announcement of a new developers' platform for the iPhone. Key excerpts:
WHY NOW? EIGHT COMPELLING REASONS. Despite current anxiety, we view current weakness in AAPL shares as an opportunity to add to positions based on our assessment of several positive inflection points:
1. WIDgets. With iPhone SDK launch today (3/6), AAPL further extended its lead in the emerging WIDget (Wireless Internet Devices: GPS, email, TV/video, social) market. Making media content portable is a 200mm unit (annual) market; making phones portable is over a 1bn unit market. WIDgets is somewhere in between.
2. VIDEO. Going forward it's not about music: it's about video. All the pieces are falling into place: AppleTV, video content, video rentals. Think non-linearly about an Apple TV-based HDTV.
3. INTERNATIONAL AT INFLECTION POINT. While Apple generates ~60% of sales from Americas, recent unit data points to acceleration in Europe, Japan & Asia.
4. MORE iPHONE MODELS, FEATURES. We expect to see more iPhone models (a la iPod), including 3G along with new features/apps in the coming months.
5. MAC MOMENTUM. With competitively priced products and growing mind share, we see continued momentum in Mac sales.
6. NEW iPOD DEMAND. It's no longer just about music, but it's about video & Internet access.
7. AND IT'S ALL SHIPPING. Three concurrent product cycles: Mac, iPhone, iPods with video coming on.
8. NOT ON HYPE-DRIVEN VALUATION. And the valuation (selling at 14x our CY09 op. EPS or 13x our CY09 cash EPS) is more reasonable.
· SEVERAL RISKS: Consumer spending particularly in the US/Europe (85% of sales). No single catalyst. Business model gets more complex with size. Are they innovating fast enough? Are they innovating too fast? Where are all those iPhones? Can AAPL keep beating expectations?
· NO EST CHANGES. We're maintaining our (reported) GAAP EPS for FY08 of $5.10, for FY09 of $6.50 and for 2Q08 of $1.08 (vs. $0.87).
· MAINTAINING TARGET. Given these multiple catalysts, we're maintaining our CY08 target of $220 using a 29x P/E on CY09 op. EPS plus $24/sh in net cash.
ping.
3 reasons not to buy Mac anything:
1. Google phone
2. PC are better
3. Macs are for snobs
By way of full disclosure: what’s your AAPL position?
I’m partial to fujies and pink ladies.
Stock Market Rule # 1:
If they’re talking about it, it’s already too late...
Do computer viruses come free with Microsoft Windows or do I have to pay extra for them ?
With the money I save on not buying anything MAC I can buy 5 licenses of the best antivirus firewall for the 5 computers bought for the price of one MAC-anything.
1. Google phone
2. PC are better
3. Macs are for snobs
I don't know about your #1 reason, but if I substitute PC = horse and Mac = auto your statement could have been made at the dawn of the 20th century.
As a 20+ year computer user, in a high tech industry, I can tell you my experience has been PCs are better for IT departments (full employment--you must have a big staff to help the users) and a very small number of computer jocks who live & breath computers, but rarely accomplish anything else outside of the computer field.
Actually, a better automotive analogy is that a Mac is like a car with an automatic transmission and GPS. Sure, I know how to shift gears, and I can still read a paper map, but unless you have some specialized reason for wanting manual shift, a modern automatic is almost always a better choice. And, until you have used a modern GPS with spoken turn-by-turn directions, you have no idea how nice it is.
Same with computers. I can always get a job done with my PC, but it might take 4 calls to the help desk and days, not hours like on my Mac.
I don’t own AAPL. Just posted the article.
>> I can always get a job done with my PC, but it might take 4 calls to the help desk and days, not hours like on my Mac.
If “the job” involves EDA or many other engineering tasks, it will take much longer than “hours” to do on a mac.
There’s no Mac software for those jobs, and many others.
Conversely, there are very few tasks (if any...?) for which Mac software exists, but not PC.
CY08 target of $220Good reason to buy Apple stock and walk the three miles to work to save gas. Y'know, since I'm trying to get down to two tanks a month (currently I run a tank in 10 or 11 days, or about $120 a month). Can't take a bus to work to save money, because buses here aren't running when I get off work at midnight. Still, might be nice to plough all available cash into Apple stock in order to dump it into the next bubble.
And still have money left over to see if you can get the integrated software that the mac comes with...throw in another 80, and you can move your whole PC over to the mac...also run linux at the same time as OS X & windows.
LOL! Nothing at all wrong with the company, but given market conditions AAPL will hit $40 before it ever sees $220.
Keep your powder dry. It isn't nearly time yet.
What licenses? Name the product and the cost. Then name the windows computer and the cost. I will bet you that you will not even be close to your claim.
And the MAC will still outperform all five together.
Seriously, I just bought an iMac for $1800. Where do you find these $360 PC's which you speak so highly of?
Cheers!
Normally I agree with your Rule #1, but not this time.
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