Boyd Ostroff
May 25th, 2003, 12:19 PM
The May 26 issue of BARRON's has an interesting article on page 14 about Apple. In spite of the listing on the cover that proclaims "False Note: iTunes won't save Apple", the actual article is entitled "Beyond iTunes: Investors applaud the new music venture, but Apple must address core weaknesses". I found the piece pretty thoughtful and well balanced.
The first part of the article focuses on Apple's big run up since opening the iTunes store, and questions whether it can be sustained. They note that AAPL closed at 13.86 on April 28, and finished last week at about $18, a 32% increase. But the author points out that Apple's $4.5 billion in the bank actually counts for $11.55/share. So if you look at the run-up in this light it's way beyond 32%; on April 28 the non-cash portion of the stock was valued at $1.80 but today it's risen to $7.00 which would be a 289% increase. They then go on to question whether this is a realistic valuation.
But aside from these market value issues, there was some speculation and discussion of whether Apple would make a shift to Intel/AMD processors. They quote analyst Andy Neff as saying that OSX has set the stage for such a shift, which he believes will occur sometime around the end of the year, allowing faster processors at lower prices. He further believes Apple may begin licensing OSX for Intel.
They also quote analyst Rob Enderle as saying Apple has already engaged in talks with Intel "It's a big problem: they are on non-competitive technology. With PowerPC, they don't have the economics of scale that Intel has. And they don't have Intel's co-op advertising dollars. So they can't maintain market share. Some people think they already have made the decision to switch."
On a somewhat related topic, has anyone else noticed those "articles" in the past few issues of DV magazine entitled "Mac Afficionado turned PC enthusiast"? Up at the top of the page it says "special advertising section". The write up focuses on Stu Maschwitz, co-founder of The Orphanage, and says how he's switched to the PC and became much more productive. The strange thing is that nowhere on the page does it say who sponsored this "special advertising section". Presumably it's Intel or Dell, as there's some really tiny print at the bottom of the page identifying their trademarks.
The first part of the article focuses on Apple's big run up since opening the iTunes store, and questions whether it can be sustained. They note that AAPL closed at 13.86 on April 28, and finished last week at about $18, a 32% increase. But the author points out that Apple's $4.5 billion in the bank actually counts for $11.55/share. So if you look at the run-up in this light it's way beyond 32%; on April 28 the non-cash portion of the stock was valued at $1.80 but today it's risen to $7.00 which would be a 289% increase. They then go on to question whether this is a realistic valuation.
But aside from these market value issues, there was some speculation and discussion of whether Apple would make a shift to Intel/AMD processors. They quote analyst Andy Neff as saying that OSX has set the stage for such a shift, which he believes will occur sometime around the end of the year, allowing faster processors at lower prices. He further believes Apple may begin licensing OSX for Intel.
They also quote analyst Rob Enderle as saying Apple has already engaged in talks with Intel "It's a big problem: they are on non-competitive technology. With PowerPC, they don't have the economics of scale that Intel has. And they don't have Intel's co-op advertising dollars. So they can't maintain market share. Some people think they already have made the decision to switch."
On a somewhat related topic, has anyone else noticed those "articles" in the past few issues of DV magazine entitled "Mac Afficionado turned PC enthusiast"? Up at the top of the page it says "special advertising section". The write up focuses on Stu Maschwitz, co-founder of The Orphanage, and says how he's switched to the PC and became much more productive. The strange thing is that nowhere on the page does it say who sponsored this "special advertising section". Presumably it's Intel or Dell, as there's some really tiny print at the bottom of the page identifying their trademarks.