Stand back! I'm not sure how big this thing is going to get!
The teaser of Rex Crum’s piece titled Apple bulls start looking beyond the iPod caused the Macalope’s furry ears to stand up today.
Steve Jobs will need more than a phone to sustain growth
What?! Can it be that the iPhone – which, if you’ve been paying attention, you’ll note has not been announced yet – is not even enough to save our beleagered Apple?!
No, this is simply a case of teasers gone wild because, while there is some other silliness, this particular assertion is not in the piece. Teasers are often not written by the reporter but by a copy editor who may or may not have read the whole piece and may or may not have understood it. Even the lede belies the implication of the teaser.
Money managers who own shares of Apple Computer Inc. — and the Wall Street analysts who follow the company — believe firmly that Chief Executive Steve Jobs has more iPod magic up his sleeve.
And what the piece says, which is true, is that Apple will need more than the iPod to sustain growth.
Yet even those who are bullish on prospects for the technology giant say Apple’s reliance on its handheld music player to power sales and profit growth cannot sustain it forever.
Fair enough, but Crum’s just begun to display his firm grasp of the obvious.
If Jobs is out of tricks, and Apple’s sales start to slow, many of the growth-fund managers who’ve bought its stock may become sellers.
Indeed! And if Steve Jobs eat an infant on live TV, it could adversely affect the company’s share price!
Crum provides some cause to be concerned about future iPod sales, mostly due to the maturation of the market, but lays it on a little thick.
And it’s not like Apple will have the media-player market to itself.
Like it does now.
Microsoft plans to spend heavily to market its new player, which it rolled out in November. While the product didn’t exactly set the world on fire at the beginning of the key holiday-shopping season — its sales through Amazon.com lagged well behind those for a half-dozen iPod models and even an iPod adapter — Microsoft has a history of tenacity and is expected to produce 10 million of the devices next year.
Two points about this:
- “Produce” != “sell”.
- In the last year, Apple’s sold an average of almost 10 million iPods a quarter.
“We think Microsoft will be Apple’s most formidable competitor,” said Prudential analyst Tortora, who has a neutral rating on Apple shares.
Truthfully, it remains to be seen if the Zune will be able to make much headway in 2007. With a starting price point of $250, it’s simply not in a position to take on “the iPod”, which consists of three (soon to be four?) separate lines, starting at $80.
But ask the Macalope again when the Zune 2.0 comes out.
Tortora, apparently, is not one of the bulls mentioned in the title. It does seems a bit odd that in a piece ostensibly about bulls, the first two quotes from analysts are rather bearish. It’s not like the bullish opinions on Apple should be hard to find. The Macalope took a look and of the last 21 firms to change their rating or initiate coverage on Apple, 17 have above-average recommendations and four are neutral.
Several analysts have already noted their expectations that iPod sales will be strong this quarter and may even beat the prior year, which was really, really big.
Crum’s point, muddled by some silliness, is about growth. Apple’s been a Wall Street darling of late because of it and it might be concerning to you if you lived in a cave and hadn’t heard anything about what Apple might have on the drawing boards for 2007. But between the iTV and rumors of the iPhone, the “true” video iPod, a lightweight laptop and a tablet device, there’s little reason for growth-fund managers to start selling Apple now.
Note: the title is the punch line from an old joke about what Adam said to Eve.
Disclaimer: the Macalope holds an insignificant number of Apple shares.