Apple Computer, Inc. (AAPL)

[GRock]

Business Summary
Apple Computer, Inc. (Apple) designs, manufactures and markets personal computers and related software, services,
peripherals and networking solutions. The Company also designs, develops and markets a line of portable digital
music players along with related accessories and services, including the online distribution of third-party music,
audio books, music videos, short films and television shows. Apple's products and services include the Macintosh
line of desktop and notebook computers; the iPod digital music player; the Xserve G5 server and Xserve redundant
array of inexpensive disks (RAID) storage products; the Mac OS X operating system (OS); the iTunes Music Store, a
portfolio of peripherals that support and enhance the Macintosh and iPod product lines, and a variety of other service
and support offerings. It sells its products worldwide through its online stores, its own retail stores, its direct sales
force, and third-party wholesalers, resellers and value-added resellers.

Contact Info
Apple Computer, Inc. is headquarted at:
1 Infinite Loop, Cupertino, CA, 95014
United States
(408) 996-1010
Apple
Nancy Paxton, Investor Relation

One of mine holdings. Got out a few weeks ago when the tools went negative. Going to buy back when the markets open back up on Wednesday. Seems all the companies I like have option backdating problems. Are they a true #1?? or

I don't think any fast growing company can go 10 to 20 years without stumbling or have growing pains. In my book since Jobs is back they belong on my list. What do you all think?

GRock

[npg]

That entirely depends how flexible your view is. Arguably, AAPL has the buzz. Also, I can see them taking a nice bite of the desktop market from microsofts 95% dominance.

Being an IT professional (games) and very fond of all things UNIX, there is simply no good desktop on UNIX (and Linux) until Apple came along with OS-X (which is a NeXT Step revamp). In that area they have little competition from Linux (and the like) as well as from MS for that matter.

I was on the Vista trial and the system is a joke. People will find it hard to get enthusiastic about.

AAPL also has a nice pipeline of sexy products and it doesn't look like it is going to dry up too soon.

With the prospect of broadband nowadays being a de facto standard, I can anticipate a huge convergence between consumer electronics and IT. Right now the battle is for the multimedia living room (and household even?). There is no company better positioned than AAPL to come up with products in this --and possible other areas such as telecoms-- that will easily find a broad audience and high acceptance rates.

I think I understand AAPL and therefore I have a substantial position in it. When I first tipped the stock as a potential value buy on this board it was a 56$.

Valuing it can be tricky though and people might find it difficult to get in at these lofty valuations. You definitively won't get in with a MoS right now.

I see it as a 30% grower for the time being.

Note that the tools tell you to get back in. I agree with the tools. Macworld is next week.

[gymmbo]

AAPL did flirt with $90 late last year and I do believe it will be back up with report from the holiday sales come out soon. Ironically, their iTunes site was either crashing and/or running very slow because of the large number of downloads they were experiencing from new iPods purchased and gift cards.

I am not convinced they will ever take a true bite out of MSFT in the market place. I know they have a product (iMovie) that will soon be coming to market that will compete directly with MSFT's Media Center OS. The idea behind this product will be to view movies from a hard drive. You will be able to download from the iTunes store from your TV. Pretty slick. No actual release yet. Maybe at Macworld.

Also, NPG, the I was also on the Vista trial and it may have been a joke, but the actual release of the OS is a better product than any of the betas.

[npg]

As far as their desktop boxes are concerned, I would strongly argue this segment has the biggest potential to contribute to AAPL earnings surprises. 95% of boxes aren't macs. It is thus quite conceivable that, especially as todays teens (who perceive AAPL gear as a must have) mature and get to buy their own kit, their desktop sales increase by a nice margin.

If AAPL has an (insignificant) market share of 10% in the future, it won't have taken a huge bite out of MSFT's market, but it will have doubled it's sales (and potentially opened a lot more revenue streams as result).

How is MSFT going to increase their market share by 100% in the desktop arena? Mathematically it is not possible. They are running against quite a few walls right now. In the last 5 years their bvps has hardly grown and it has a sharp dip (-15%) TTM. Evidence enough for a ceiling.

I don't sanction anything AAPL does, but I do make a compelling argument for its growth potential (it won't be a given, they can still mess it up) and wanted to highlight the under-estimated business of their desktop computers --which is increasingly doing better.

[nancy802]

AAPL does look interesting. The option backdating "scandal" has depressed the stock price a bit, I think. This will likely blow over soon.

Cramer gave AAPL a big plug yesterday, naming it his #2 growth stock for 2007 (NYX was his #1).

With Cramer's plug yesterday, CES and MacWorld next week, along with the possible expected announcements of an iPhone at those events, I thought AAPL would be trading up today, however, it is down.

A search revealed a rumor that originated this morning regarding Steve Jobs' taking a leave of absence. » Latest Macworld rumor grist: Jobs’ health | Between the Lines | ZDNet.com

I am going to wait a bit to see how this resolves.

[GRock]

Originally Posted by npg

As far as their desktop boxes are concerned, I would strongly argue this segment has the biggest potential to contribute to AAPL earnings surprises. 95% of boxes aren't macs. It is thus quite conceivable that, especially as todays teens (who perceive AAPL gear as a must have) mature and get to buy their own kit, their desktop sales increase by a nice margin.

If AAPL has an (insignificant) market share of 10% in the future, it won't have taken a huge bite out of MSFT's market, but it will have doubled it's sales (and potentially opened a lot more revenue streams as result).

How is MSFT going to increase their market share by 100% in the desktop arena? Mathematically it is not possible. They are running against quite a few walls right now. In the last 5 years their bvps has hardly grown and it has a sharp dip (-15%) TTM. Evidence enough for a ceiling.

I don't sanction anything AAPL does, but I do make a compelling argument for its growth potential (it won't be a given, they can still mess it up) and wanted to highlight the under-estimated business of their desktop computers --which is increasingly doing better.

Just checked Reuters research on Apple on my e-trade site and BVS has more than doubled the past 4 years. It has an * next to TTM which I'm sure is becaused of delayed financials due to option expense restating. Googled the cancer thing appears is an old story. He had a treatable lesion and had surgery a couple of years ago. Think the "edgies" (hedge fund Cramer speak) are running rumor's so to get out of thier short positions. You got to read Cramer's "Confessions..." to get a read on what the big boys do to manipulate stock prices.
Not a true 10 year history to go by but I still put it in my #1 list. I think most number oners are not perfect for 10 years or for another 10 years going foward.

GRock

[npg]

Well, here is my play on that company...

Since the mid 90's i've been an active member of the GNU community, only to meet (to my dismay) RMS (Richard Stallman) and concluded that he was no better than what he pretended to fight against (whoever said you should never meet your heroes is right!).

On goes the .com boom. On goes the crash. But helas, in the tech world Linux has made a noticeable entry (bear with me pls).

Markets recover and gain new highs (not relatively but hey...).

Linux is still around and a contender.

Why does it matter with AAPL? Well, OS-X is based on NeXT Step which has a pretty stellar UNIX pedigree, throw a bit of smalltalk into it and cook it with the most advanced UI in the industry and u got it.

Shortly after OS-X launched, I noticed that some pretty hard core kernel hackers switched to it from their preferred flavor of freely distributable UNIX (Linux, FreeBSD, NetBSD, OpenBSD and even Solaris). The answer? I want a desktop that works and is better. There are no other alternatives.

Aaaah!

So, what we are looking here is not what the street sees. The street still has a laptop on win32 mindset and is going down bad in betting on its future. Even more, Bill Gates has left the driving seat and there is no one to fill the position and, as result, the innovation drive suffers BADLY. In fact, if you look at MS in the last 3-5 years equity growth it is effectively RECEEDING!

Ok. iPod, iPhone, iWhatver!

One of the huge factors that street pundits don't comprehend is that there is a change of guard here. The future is about to take over from the past.

iPod sales are increasing. Predictable. iPhone creates hype. Predict.... deffo!

But the real strenght comes from Apple's eco system and the iMacs and Mac Pro's are central to this strategy. No more messing about with 3rd party lameware, no more installing umpteens of badly engineered support software on your hub. Stay in the ecosystem and everything will work and of a higher standard then you have experienced before. Even Linux with its open software stance has never managed to achieve this feat. As long as the rest of the UNIX world stays with X-Windows it is doomed to be a fringe group. Quartz is the best desktop on a UNIX (-like) platform. Period.

So, it is not hard to figure the huge massive moat that these guys are building. Regardless of what the street thinks. They are too much focussed on their excel spreadsheets not realising that in 10 years time they are the laggards. Apple is engineering its own consumer electronics platform on one of the most portable operating systems on the planet (namely Mach 3.3 + various inclusions from other unix or unix-like systems). This is why the transition from PowerPC to Intel went so smooth. To anyone familiar with UNIX developement and micro-kernels this is no surprise.

Note that iPod and iMac sales both are strong and better than expected. The iPhone does not usher a new telephony age for Apple, it is a new way of interacting within that eco system. That technology will affect many more devices than people will imagine today (hey? have any of the illustrious analysts actually ever touched on that subject? Not!)

Could the iPhone flop? Well, the iPod flopped at start, so why not? But on the long term view it will usher a new area how consumer will interact and use their electronics. Whether you want the phone bit or not, it is very concievable that this kind of interface will become increasingly dominant in the Mac ecosystem.

What people don't get is that it is the best solution for the computer on the go. I dare to say even better than laptops. If you know how to develop on OS-X you can develop for the iPhone and its derivatives. After all, they all run the SAME operating system.

So, AAPL is still a truly contrarian stock. Once people realise it is more than about iPods then the company will be priced correctly.

I am surprised I even say this publicly. I never was a Mac fanboy but I do know quality when I see it (within my circle of competence).

Guys, dig a bit into this and let me know your thoughts. Any criticism and public challenges highly welcome! 8)

Let's discuss companies, not price levels!

[GRock]

NPG sounds like your in the computer biz. Jobs has more tricks up his sleeve. History would show I-pod came out and was mac compatible only and sales were nothing. Then PC compatable and the rocket took off. HMMMM?? The Mac market small nitch market. Switch to Intel chips duel boot programs to use windows software. HMMMM?? Apple is fixing to make a major assault on PC market. That is wear the BIG market is. Just as the I-Pod assaulted the PC world the mac will be doing the same. The same old same old with the mac just can't be in the cards. I don't know how though. Can the Mac OS be designed to run windows programs directly?

GRock

[npg]

Originally Posted by GRock

NPG sounds like your in the computer biz. Jobs has more tricks up his sleeve. History would show I-pod came out and was mac compatible only and sales were nothing. Then PC compatable and the rocket took off. HMMMM?? The Mac market small nitch market. Switch to Intel chips duel boot programs to use windows software. HMMMM?? Apple is fixing to make a major assault on PC market. That is wear the BIG market is. Just as the I-Pod assaulted the PC world the mac will be doing the same. The same old same old with the mac just can't be in the cards. I don't know how though. Can the Mac OS be designed to run windows programs directly?

GRock

The next release is code named Leopard. It is also the OS that runs on the iPhone. It supports a new animation framework (animation-core), which will allow developers to tap in to all the nice animations you currently see on iTunes 7 and on the iPhone.

Apple - Apple - Mac OS X - Leopard Sneak Peek

Some people have reported that they have seen windows apps run natively within Mac OS in a research environment. Whether they are going to include this in the next OS, if ever, remains to be seen. A possible scenario is that you still install Windows on a second partition but call the apps from within MacOS. It is really best to have a full windows installation for this kind of thing, since you need all the libraries.

If you google for 'mac leopard' you will get quite a few hits and you can tap into the rumor mill yourself.

What is interesting is whether Apple are going to be the ones going truly touch screen hardware on their entire product range. This is a major rethink on how people use the equipment today and Apple is the company most able to start a revolution like this.

Imagine a laptop with you flap open only to have a huge screen in the midle. No trackpad, no keyboard keys. Only a big screen. Just a bigger iPhone really. That's not that hard to imagine, is it?

We know more once Leopard is out.

Right now I would keep my fingers off Apple stock since it finds it hard to break through the 97-98$ barrier. Traditionally, this coming quatre has never been a good one for the IT industry in terms of sales. So the money leaves for other shores and the bears come out, creating a nice opportunity to bag this one at a nice discount.

These guys have a whole new product range lined up. They will gradually introduce it over the next years.

Windows has 95% market share on the desktop. Apple 2.4%. It is quite conceivable that they might achieve a 15 - 20% market share over the next 5 - 10 years. Mathematically it is impossible for MSFT to have the same growth in the desktop market now. In my book, MSFT has peaked.

PS: I remember a time when MSFT was the underdog fighting the evil empire. Things change fast in Silicon Valley.

[loslobos71]

I agree with your fundamental analysis of the company, for technical analysis check out Wallstrip comes back to Apple | The Wallstrip Blog