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Merrill Lynch speculates on potential Sony-Apple partnership

post #1 of 25
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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 Apples 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.
post #2 of 25
how would this affect sony's Connect music store and Walkman lines? \
post #3 of 25
At the risk of sounding juvenile, my very first 1st post in reply to an appleinsider article thingy !!! yay!!!
post #4 of 25
I'm afraid I think this is an analyst too far. He's making a hell of a stretch from a comment at a keynote; a comment that was there simply to bitchslap Bill Gates. Bill had hinted at an MS tie up with Sony on music and both Apple and Sony were somwhat pissed off.

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.
post #5 of 25
I think this dude has been slaking off at work reading these forums. This conjecture was posted here and other boards since about 3 seconds after Steve said "who knows maybe someday computers and music..." at MWSF

Dude find some other news.
post #6 of 25
I dunno, I think he may be right. Check out this story about Sony-Ericsson Walkman phones...

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.
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My brain is hung like a HORSE!
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post #7 of 25
Gotta love Merrill Lynch for yet another over-optimistic share value prediction - especially as I have a lot of AAPL (bought them at $23 and $16 two-three years ago).
post #8 of 25
Quote:
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?
post #9 of 25
The only reason for Sony Connect to continue is that Sony titles from it are pure profit. The only way so far for Sony to do this is using WMA. So Steve has to give Sony an incredible deal to abandon that ... and with so much money going to the publishers anyway, I don't know where that extra will come from ... not the artist or Apple's little profit per song.

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.
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post #10 of 25
. . . Whatever . . . but Apple stock is now 87+ and climbing fast!!!



yeeeehawww!!



If this sony thing turns out to be nada, then it will probably go down very fast . . .



nooohawwww!
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post #11 of 25
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.
post #12 of 25
Keep the good news and speculation flowing!!!!!

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.
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Fight for the smallest minority- "The individual"
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post #13 of 25
Quote:
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!!
Mac user since before you were born.
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Mac user since before you were born.
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post #14 of 25
I've no doubt that APPL will hit $100 (or rather $50 after the split) but everyone should realise that its trading at a huge premium over earnings. Any bad news and it will tank, quickly. Apple need to keep the hits coming and they know it. Lots of software and hardware goodies plus strategic alliances over the next couple of years.

Its a good time to be an Apple Fanboi
post #15 of 25
f8ck me... share is now $88.41

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....
post #16 of 25
as long as my mac never has a sony logo on it im cool with whatever...
post #17 of 25
Even without a screw up --the stock price has risen awfully fast--and those people who have a big profit will likely sell off after the split.
post #18 of 25
Make that 89.27 and rising . . .



bubble?!?!
"They never stop thinking about new ways to harm our country and our people, and neither do we."
--George W Bush

"Narrative is what starts to happen after eight minutes
--Franklin Miller.

"Nothing...

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"They never stop thinking about new ways to harm our country and our people, and neither do we."
--George W Bush

"Narrative is what starts to happen after eight minutes
--Franklin Miller.

"Nothing...

Reply
post #19 of 25
Quote:
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).
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post #20 of 25
Analysts and institutions are pushing AAPL now for whatever reason. In any case, post-split it will start off high, then probably quick round of profit taking will push it down a bit....

i'm confused
post #21 of 25
jesus christ it hit $90

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
post #22 of 25
You can always buy some short term protective puts
post #23 of 25
Quote:
Originally posted by sammick
You can always buy some short term protective puts

yeah you mean stop-loss strategies? 8)

problem is, i don't got no apple stock \ just speculating, like this merril lynch guy that's trying to drive up the stock price he's been reading too much appleinsider
post #24 of 25
Merrill Lynch Analyst was wrong.



Japan's Sony to take on iPod

Thu Feb 17,10:43 AM ET
Technology - AFP

TOKYO (AFP) - Sony, which 25 years ago changed the way
the world listened to music with the Walkman, said it
would release a product by the end of the year in
hopes of dethroning Apple's hot-selling iPod.

"We are confident of being able to offer by the end of
the year a product that is much more competitive than
the iPod," Sony president Kunitake Ando said.

Ando said Apple's success was in developing a product
that is simple to use.

"We have to develop software that makes use of our
products more intuitive and simple," he told
reporters.

Apple jumped back into profit through the iPod, which
allows users to carry a song library in their pocket
and which hit the stores in October 2001.

It was a continuation of the revolution launched in
1979 by Sony, which created a new culture of portable
music with the Walkman.

Ando dismissed rumors of Sony buying Apple, saying it
"has become too expensive because of the success of
iPod."

"We have put in place a very aggressive plan to become
number one again" in portable music, said Nobuyuki
Idei, Sony chairman and chief executive officer.




__________________________________
post #25 of 25
and realising the merril lynch guy was talking out his a** the stock price eases off $90 but since this so called Sony iPod-killer is at this stage, well, vaporware, stock holds above $85

even more vaporware (at this stage): easy-to-use Sony software it'll take them a bit to catch up to OS X and iTunes-level of ease-of-use
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