Merrill Lynch speculates on potential Sony-Apple partnership
Noting that Apple and Sony have collaborated and competed for years, Merrill Lynch said today that the next step between the companies could lead to a full-fledged partnership.
In a research note released to clients on Tuesday, Merrill Lynch analyst Steven Milunovich said his firm found it intriguing that Sony President Kunitake Ando was on stage at Macworld with Apple CEO Steve Jobs, speculating on a potential partnership between the two tech companies.
"Why did Steve Jobs say that Apple and Sony could possibly work together on computers and music? We think Apple could introduce products based on the IBM/Sony/Toshiba Cell processor," the analyst said.
Merrill Lynch believes that an Apple/Sony partnership could form around an iTunes-like iMovies store online using the H.264 codec and streaming Sony and Pixar content; a high-performance Apple workstation using Cell for video editing; or a network-centric TV with computing for handling the next-generation of entertainment feeds.
"Our thoughts represent logical conjecture and are not based on knowledge of Apple?s development plans," the firm cautioned. "Such offerings, however, would put Apple at the heart of the HD and digital consumer revolution and provide grist for further earnings increases and stock price appreciation."
Merrill Lynch reiterated its 'Buy' rating on Apple with a new price objective of $102 per share, which is supported by a two-stage discounted earnings model that assumes post-fiscal year 2006 earnings per share growth of 33% for five years followed by sustained EPS growth of 5% per year.
"Alternatively, there should be an increasing real option value embedded in the stock as Apple leverages iPod success into new product lines," the firm said.
Yesterday, UBS also raised its 12-month price target on Apple, citing the upside of Apple's software business while Piper Jaffray maintained an "outperform" rating on Apple.
In a research note released to clients on Tuesday, Merrill Lynch analyst Steven Milunovich said his firm found it intriguing that Sony President Kunitake Ando was on stage at Macworld with Apple CEO Steve Jobs, speculating on a potential partnership between the two tech companies.
"Why did Steve Jobs say that Apple and Sony could possibly work together on computers and music? We think Apple could introduce products based on the IBM/Sony/Toshiba Cell processor," the analyst said.
Merrill Lynch believes that an Apple/Sony partnership could form around an iTunes-like iMovies store online using the H.264 codec and streaming Sony and Pixar content; a high-performance Apple workstation using Cell for video editing; or a network-centric TV with computing for handling the next-generation of entertainment feeds.
"Our thoughts represent logical conjecture and are not based on knowledge of Apple?s development plans," the firm cautioned. "Such offerings, however, would put Apple at the heart of the HD and digital consumer revolution and provide grist for further earnings increases and stock price appreciation."
Merrill Lynch reiterated its 'Buy' rating on Apple with a new price objective of $102 per share, which is supported by a two-stage discounted earnings model that assumes post-fiscal year 2006 earnings per share growth of 33% for five years followed by sustained EPS growth of 5% per year.
"Alternatively, there should be an increasing real option value embedded in the stock as Apple leverages iPod success into new product lines," the firm said.
Yesterday, UBS also raised its 12-month price target on Apple, citing the upside of Apple's software business while Piper Jaffray maintained an "outperform" rating on Apple.
Comments
There will undoubtedly be co-operation on some fronts over the next couple of years; Sony's Connect is going nowhere and they know it, they will have to choose between MS and Apple at some point, Sony Errricccson seem to be heading MS's way. Steve will be putting on the squeeze for Sony's film content but an iMovie store has gotta be 2 years away at least (Pixar, Disney, Sony? that would be a good start)
I expect there will be a Cell device from apple but it won't be a Mac as such. The ÜberPowerMac will be Power5 based so that bit of analyst spiel is bollocks.
Dude find some other news.
Note the formats supported. MP3, AAC, no WMA in sight.
Note also that they didn't say what online store it would work with, if any. The *assumption* is Sony's, but it's bleeding money hand over fist. This may be what Apple needs to get the Sony labels on board at iTMS. "Look, your venture isn't working out, we have the distribution framework in place, and it happens to be the world's most popular. Your phone already plays AAC. Shut down Sony Connect, save yourself some cash, and let us be your partner."
Tis a possibility.
Originally posted by Kickaha
"Look, your venture isn't working out, we have the distribution framework in place, and it happens to be the world's most popular. Your phone already plays AAC. Shut down Sony Connect, save yourself some cash, and let us be your partner."
This is the strongest of all other partnership possibilities at the moment. Sony Connect is going nowhere -- another Sony proprietary also-ran. Apple and Sony both need Sony content on iTMS -- Sony just needs to cave in. It's only a matter of time.
What I find amusing is that Apple is ultimately trying to out-Sony Sony. They are turning the computer into a configurable, upgradable home consumer electronics device.
I'm glad to see analysts have returned to Earth after the last burst bubble. Are you telling me Merrill or this analyst have no stake in Apple?
The Cell and games are possible, but again there is no reason for Sony to cave in to Apple in either right now. PlayStation doesn't need Apple.
For computers, Apple and Sony are about even in the market and have similar reps for quality. Sony could use a non-MS OS that isn't Linux, but would Apple let them play with the desk top and all? Would Sony just eliminate the one reason people choose PC's .... a huge library of apps (though we all know 50% have great Mac counterparts and the other 50% are for small niche markets)! So they are going to try to out Apple in a 5% market share? Don't think so. They would more likely quit the PC business first.
So there is HD editing and workflow and workstations...that may be the place. There are new markets like iMovie Store that are not yet areas of competition between the two, but that is financially going to be great only after a few more years.
Just seems to me like too much upside for Apple and not enough for Sony yet.
yeeeehawww!!
If this sony thing turns out to be nada, then it will probably go down very fast . . .
nooohawwww!
Also, I work next door to SONY's HQ, and I talk to a lot of their executives every day. There are no plans for a partnership that I have heard of, and I have asked them. Frankly, SONY sees Apple as a competitor - plain and simple. They would not partner with them.
Im glad I bought a few hundred shares @ $25 and I havent sold them yet.
I'll most likely wait to after the actual stock split to see how it trends and then I might sell.
Originally posted by marinello2003
Why would Apple need SONY? SONY needs Apple!
Also, I work next door to SONY's HQ, and I talk to a lot of their executives every day. There are no plans for a partnership that I have heard of, and I have asked them. Frankly, SONY sees Apple as a competitor - plain and simple. They would not partner with them.
Well I'm CEO of sony and I says Microsoft is going to buy us both and have us fight each other like cobra commander and GI-Joe action figures!!
Its a good time to be an Apple Fanboi
is could hit $50 post-split
i tell you though analysts are definitely trying to play their hand in this and feed off the iPod halo-effect spilling over into the share price
you are right, some major screw-up by apple, and people will start bailing fast
but luckily we know apple has the goods, and there's enough momentum still going now
but $88 now... really, f8ck me....
bubble?!?!
Originally posted by pfflam
Make that 89.27 and rising . . .
bubble?!?!
I remember with NT was up at 87, and people were saying that it would go to 200. Look at it now...
Stocks can unexpectedly drop, nobody should be investing more than 10% of their portfolio in a single stock unless they work at the company in question (and so have their finger on the pulse).
i'm confused
tech stock...! in 2005
looks like the split strategy worked (for the short term)
i predict big sell-off post-split,
but it will still hit $50 (post-split) by the end of the year