Apple Computer Inc. Predictions

Posted on September 27, 2005 , filed under Business Gossip, Stocks | Print This Post

I’ll go out on a limb by making some predictions about AAPL, Apple Computer Inc. I believe the bulls are out in full force and have driven up the price of stock beyond a reasonable price. I don’t think its about to end anytime soon. Apple will surely enjoy success with its Nano iPod, the replacement for the mini iPod. Apple is also enjoying a healthy margain for sales of the Nano iPod. In a recent business week article, it was estimated that the cost of an iPod Nano, including assembly, was $98.18. This gives AAPL an over 50% margin before its marketing and distribution costs.

My speculation over Apple, is that the company is a one hit wonder. Apple has a diverse product portfolio, but none of Apple’s products have contributed to the increase in its stock price as much as the iPod. Even the iMac or the Mini Mac, great products in their own right, have failed to deliver even a 1/2 of iPod’s sales. What happens when interest in portable music players wanes or sales of the iPod start to taper? Long term holders of the stock have to have faith in Steve Jobs to produce another wonder for the company on an iPod scale. How many companies have successfully released two hardware products that represent entire platforms back to back? Statistically I’m sure the number is small. The bulls will argue that Apple is a different company, flush with innovation and design talent. What the bulls forget though is that Apple has always been a great industrial design company that released lots of innovative products. Anyone remember the Apple Newton? The Newton, like the iPod, was Apple’s entry into creating a PDA platform for themselves. What happens if Steve Job’s introduces another Newton for Apple? The bulls are forgetting that Apple launched many products before launching the iPod.

The entire consumer electronics industry is moving toward the next big thing, most likely some type of pervasive video device judging by the investment in various low voltage display technologies, such as OLED – Organic Light Emitting Diode Displays. If success was assured by launching a hardware platform or even a distribution platform, today we would have seen companies like Sony leading the way in portable hard disk or flash based audio players. Sony certainly dominated the Walkman, Sony’s trademark for portable cassette players, days.

Apple reminds me of another company during the portable cassette player days, Aiwa. Aiwa was hugely successful with their portable cassette players. They attempted to branch out but failed to do so. If Apple turns into another Aiwa long term holders of the stock will be in a bad situation. Apple can only sell so many iPod’s before mass saturation and price cuts occur. Even Apple’s distribution platform iTunes isn’t invulnerable to replacement since it is so closely tied to the iPod. What happens if the distribution method becomes wireless, i.e. a high speed wireless data network that can download directly to a device with integrated storage? This type of product was release by Sony this year and enjoying success in Asia. If iTunes loses its exclusivity and opens up to all portable music devices, the company will have lost a distinct competitive advantage. Right now I believe Apple wants full control and will only license to hardware vendors like Motorola who must choose to pay to have an iTunes branded product.

Point blank though, the company is becoming too reliant on the iPod. The bulls will drive the price of the stock up further due to greed.

My end of year price target for AAPL is $70
My predicted all time high for AAPL is $80
My predicted long term price for AAPL is $25-30 in 2-3 years

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4 Comments »

Pingback by RawGreed.com - Stock Updates, RawGreed Awards, Business Gossip » Blog Archive » Apple Computer Inc. set to launch something big

2005-10-11 09:35:04

[...] I wrote in this article that Apple’s stock should continue to appreciate as the company enjoys strong sales of its new iPod Nano. A confirmation of a new device, promising Apple a new entry into a new platform, should temporarily raise the price of the stock as greed takes its effect. Analysts will be riding the afterglow of the iPod’s success. I will be watching this Wednesday’s announcement to see how I should play out buying or shorting AAPL. [...]

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Pingback by RawGreed.com - Stock Updates, RawGreed Awards, Business Gossip » Blog Archive » Apple Computer Inc., a look at my earlier predictions

2005-11-23 19:11:08

[...] On September 27th, 2005, I wrote an article titled Apple Computer Inc. Predictions about AAPL, Apple Computer Inc.’s long term price targets. A brief summary of what I wrote is below. On September 27th, 2005 AAPL was trading at mid $53’s. Point blank though, the company is becoming too reliant on the iPod. The bulls will drive the price of the stock up further due to greed. [...]

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Pingback by RawGreed.com - Stock Updates, RawGreed Awards, Business Gossip » Blog Archive » Apple Computer Inc. hits $70

2005-11-28 09:59:55

[...] AAPL, Apple Computer Inc. has hit my $70 price target. On September 27th, 2005, I wrote an article titled Apple Computer Inc. Predictions about AAPL’s long term prospects and price targets. On September 27th, 2005, AAPL was trading at mid $53’s. A brief summary of what I wrote is below. Point blank though, the company is becoming too reliant on the iPod. The bulls will drive the price of the stock up further due to greed. [...]

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Pingback by RawGreed.com - Stock Updates, RawGreed Awards, Business Gossip » Blog Archive » Good Morning, lets get started

2005-12-02 10:43:57

[...] This morning we opened slightly lower. I expect to see the market reverse and close up today. AAPL, Apple Computer Inc. just touched above $72. On September 23rd, 2005, when AAPL was trading at $53, I predicted that AAPL would reach $70 by the end of the year. I predicted that all time high for AAPL would be $80. I am considering shorting shares of the company if the stock reaches high $70’s-low$80’s by the end of the year. Purchasers of APPL are betting on the company’s non stop growth. I believe sales of the Nano and new video enabled iPod’s will be strong this holiday, but unsustainable in the long run. Any consumer electronics device goes through rapidly changing trends and diminishing margins. I see that manufacturers are releasing solid state and disk based mp3 players with lower prices and betting on volume sales. The iPod is equally a fashionable and functional device. When the Nano and video enabled iPod drop out of being seen as a fashionable device, APPL will likely have to drop prices in order to maintain sales levels. Investors clearly have forgotten than AAPL was trading at mid $9’s just two years ago in December of 2003. In the history of consumer electronics devices no one device category or company has been able to consistently retain margins and sales levels. Historically look at what happened to powerhouse companies like AIWA and SONY during the portable cassette and CD player days. Sony even failed to capitalize on the Walkman brand name for digital audio players. Consumer electronics change at a heartbreaking pace and Investors would do well to monitor sales trends and emerging technology. The share price of APPL could also change at a similar heartbreaking pace. I wrote an article on September 27th, 2005, covering many of my long term predictions for AAPL. [...]

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