Wall Street analysts weigh in on Apple's Macworld announcements

Posted:
in General Discussion edited January 2014
Wall Street's usual suspects have started to weigh in on Apple's Macworld announcements, with most speaking favorably of what company chief executive Steve Jobs laid out on Tuesday. However, at least one analyst was skeptical about the potential for the new MacBook Air.



Shaw Wu, an analyst with American Technology Research said iTunes Movie Rentals may end up being a bigger deal than some expected.



"On the surface, the announcements look underwhelming and somewhat expected; however, we think when looking back several years from now that the iTunes Movie Rentals announcement will likely end up being a landmark event and potential game-changer," he wrote. "We think movies will ultimately help in driving more users to the Apple platform (iTunes, iPod, iPhone, Mac, Apple TV). In fact, this announcement reminds us of the launch of the iTunes Music Store back in late April 2003 which helped ignite a multi-year 'digital music cycle'. We believe we may be at the beginning of a 'digital video cycle' where there is a fundamental paradigm shift to online video from physical DVDs. In our view, Apple is well-positioned to become a key destination for movies much like it is for music, music videos, and TV shows.



The analyst, however, was a bit cautious in predicting that the MacBook Air would also be a smash hit, saying it may share a bit too much in common with Apple's other notebook offerings, yet provide only limited differentiation in terms of compelling new features.



"While we are impressed with the new MacBook Air and its industrial design, it is not as clear if it will drive incremental buying as has Asus' Eee sub-notebook," he told clients. "To us, there may be too much overlap with its existing MacBook and MacBook Pro. But then again, Apple has proven fairly adept with product placement, most recently with iPhone and iPod touch where there has been minimal cannibalization despite overlapping functionality."



The AmTech analyst added that while Apple shares have been pressured with the technology sector due to macroeconomic concerns, he believes the company is well-positioned to weather the storm better than most with its strong fundamentals.



"We see upside to [our] $210 [price target] in 6-12 months," he wrote.



Over at Piper Jaffray, analyst Gene Munster was bit more bullish on the MacBook Air, saying he believes the super-slim notebook should fuel market share games for the Cupertino-based Apple, helping the company garner an additional 20-30 basis points of global PC market share in 2008.



Apple should also see incremental hardware sales due to the recent addition of iTunes Movie Rental content, according to Munster.



"The consumer's desire to enjoy content whenever and wherever is a clear trend in digital media," he wrote. "We believe that the ability to rent movies on iTunes for $2.99-$3.99 will drive significant interest in Apple's entertainment ecosystem. This ecosystem now includes the Apple TV, iPod and iPhone. Because of the integration of these devices, consumers can be certain that by purchasing Apple devices they can view their content whenever and wherever. Moreover, as people invest in digital media libraries, Apple customers can be assured that their devices will work with newly released content in the future."



Munster maintained his Buy rating and $250 price target on shares of the company.



Ingrid Ebeling, an analyst with JMP securities, shared a similar view on Apple's Macworld announcements, explaining to clients in a research note that she believes Apple continues to stay ahead of the curve and deliver what consumers want.



"We believe Apple?s ability to seamlessly integrate digital media from the Internet onto consumer devices, including HDTVs, will continue to drive market share growth of its Mac business," she wrote.



The analyst reiterated her our Market Outperform rating and $210 price target on shares of the company.
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Comments

  • Reply 1 of 39
    MacProMacPro Posts: 17,868member
    I was hoping for $250 in 6 months
  • Reply 2 of 39
    It appears that I am in the minority but I don't see the benefit of paying $3-4 to rent a movie that has to be watched within 24 hours especially if I want to view it more than once, I may as well pay the $10 and buy it.



    Also not being able to put it on both the Apple TV and iPod make buying the better deal.



    If the rentals were $1-2 and the viewing time were much greater than 24 hours (at least a week) they would have a greater appeal to me.



    I hope that Fox and other studios that are providing rental-only films will eventually allow us to purchase them as well.



    -eric
  • Reply 3 of 39
    user23user23 Posts: 199member
    Quote:
    Originally Posted by edunaway View Post


    It appears that I am in the minority but I don't see the benefit of paying $3-4 to rent a movie that has to be watched within 24 hours especially if I want to view it more than once, I may as well pay the $10 and buy it.



    Also not being able to put it on both the Apple TV and iPod make buying the better deal.



    If the rentals were $1-2 and the viewing time were much greater than 24 hours (at least a week) they would have a greater appeal to me.



    I hope that Fox and other studios that are providing rental-only films will eventually allow us to purchase them as well.



    -eric





    you have 30 days to watch the movie...once played, you have 24 hours to complete viewing. Hardly a limiting model given how most people rent movies. I suppose it's not as free as the netflix model (keep it until you return it)...but this is very similar.



    also, what do you mean "not being able to put it on both the Apple TV and iPod"? The movie rental concept demoed (maybe I'm wrong here) via Take 2. And, I think I remember Jobs saying that you _can_ transfer the video to any current generation iPod/iPhone.



    edit: By the way, where in the world can anyone rent a movie for $1-$2?
  • Reply 4 of 39
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by edunaway View Post


    I want to view it more than once, I may as well pay the $10 and buy it.



    Most people watch a film ONCE, so buying them is not preferable. It's why rental stores did so well in the 80s and 90s.





    Quote:
    Originally Posted by user23 View Post


    you have 30 days to watch the movie...once played, you have 24 hours to complete viewing. Hardly a limiting model given how most people rent movies. I suppose it's not as free as the netflix model (keep it until you return it)...but this is very similar.



    But in some ways it's more free as you don't have to wait days between ordering movies and them arriving and can take as many with you on a trip.



    Quote:

    also, what do you mean "not being able to put it on both the Apple TV and iPod"? The movie rental concept demoed (maybe I'm wrong here) via Take 2. And, I think I remember Jobs saying that you _can_ transfer the video to any current generation iPod/iPhone.



    You are not wrong. The only way you can't move a rented video from the AppleTV is if it's HD. You also can't rent an HD movie from within iTunes. I suspect the reason for this is too keep these customers from trying to get out ncnompatible files on there iDevices and then bitching when they realize that the kbps are too large for the small processors to handle.
  • Reply 5 of 39
    In my area many grocery stores have had rentals for $1-2 each for nearly a decade. My point is why must we accept that a movie rental should cost $3-4 from an online store? They do not have the same overhead costs of a retail establishment, no inventory to worry about and distribution costs are much lower so pass on the savings to the consumer.



    And for the same reasons why must my viewing period be limited to 24 hours? What if I want to take my time and watch it over a couple of days? A 24 limit made sense for physical media because they want to maximize their rentals and they are limited by the physical media, but with a digital download they can rent unlimited copies concurrently.



    The prices and rental periods are old retail mindset models that, just like the album, need to be broken up.
  • Reply 6 of 39
    g3prog3pro Posts: 669member
    The analysts should have made a more realistic target around 115 or so for at least the next 6 months. Depending on how bad the recession/depression will be, the target should be adjusted even more.
  • Reply 7 of 39
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by edunaway View Post


    It appears that I am in the minority but I don't see the benefit of paying $3-4 to rent a movie that has to be watched within 24 hours especially if I want to view it more than once, I may as well pay the $10 and buy it.



    Actually, you have up to 30 days to watch it.



    Compare that with paying $5.99 (plus the cost of gas) to rent it at Blockbuster and having to return it within either 2 or 7 days, depending on the movie.



    $4 and 30 days doesn't sound like such a bad deal.
  • Reply 8 of 39
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by g3pro View Post


    The analysts should have made a more realistic target around 115 or so for at least the next 6 months. Depending on how bad the recession/depression will be, the target should be adjusted even more.



    Fortunately, the real world isn't that pessimistic. That would require Apple stock to drop by more than a third - after a 5 or 6% drop yesterday. It would take far worse economic conditions than we're likely to see for the market to drop that much.
  • Reply 9 of 39
    tundraboytundraboy Posts: 1,597member
    The next analyst who says 'paradigm shift' ought to be taken out the back and shot.



    That aside, there are what 7+ million Netflix subscribers. How many people use iTunes to manage their music and video? Who is the biggest download vendor of videos? Who's willing to bet against inertia (If iTunes rentals are available why should I bother learning the Neflix website/platform?) as the single biggest factor that will be responsible for iTunes movie rentals swamping Netflix in the next couple of years?



    Blockbuster is dead. Netflix may keep their current subscribers but will have a very hard time attracting new ones. Oh yeah they'll roll out a box built by LG soon. LG, that exemplar of simple, user friendly user interfaces. Not!
  • Reply 10 of 39
    Quote:

    Originally Posted by User23



    By the way, where in the world can anyone rent a movie for $1-$2?





    You can rent movies at any Redbox for only $1 a night and they are popping up everywhere. You can usually find them outside of McDonalds and inside grocery stores if they are in your area.
  • Reply 11 of 39
    tundraboytundraboy Posts: 1,597member
    Quote:
    Originally Posted by runnerxt2001 View Post


    You can rent movies at any Redbox for only $1 a night and they are popping up everywhere. You can usually find them outside of McDonalds and inside grocery stores if they are in your area.



    The question is, do you think people are willing to get up and drive to the grocery and back twice just to save 2 bucks? Okay so the first trip is for groceries. So one trip to the grocery and back just to save two bucks?



    This is a nation of couch potatoes and $2 ringtones. I'm betting Apple wins this calculation. Plus hey, we spew out less greenhouse gases by foregoing those trips.
  • Reply 12 of 39
    Quote:
    Originally Posted by digitalclips View Post


    I was hoping for $250 in 6 months



    That's how bubbles happen..
  • Reply 13 of 39
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by user23 View Post


    edit: By the way, where in the world can anyone rent a movie for $1-$2?



    I think it's called "Red Box" in my area. I think it's $1/night. But you don't get the 30 days to watch, so iTunes can be a better deal if you might want to wait a few days.



    I average less than $2/rental with Netflix and there's no time bomb. I've even kept movies for six+ weeks on two different occasions, one I've watched a couple times, two weeks apart, the marginal cost of that movie sitting around vs. not having that extra would be $5. The same with iTunes would have been $10 because it was an HD movie.



    Still, I think 30 days is fine, but only 24 hours to finish might be a bit tough for people. If you start at 8pm one night and can't finish that night, you need to finish it before 8pm the next night. Even 28 or 36 hours would be less of a noose.
  • Reply 14 of 39
    Quote:
    Originally Posted by AppleInsider View Post


    Shaw Wu, an analyst with American Technology Research said iTunes Movie Rentals may end up being a bigger deal than some expected.



    "On the surface, the announcements look underwhelming and somewhat expected; however, we think when looking back several years from now that the iTunes Movie Rentals announcement will likely end up being a landmark event and potential game-changer," he wrote.



    I agree with Wu. I was surprised at the breadth of support Apple gained in the last week or so (all the major studios), but not the depth (that will come). What Apple is doing is laying the infrastructure to support its transition of the ipod (as dedicated MP3 player) into a media player over the next 1-3 years. The impact on the aTV (which will occur) will be en passant until they reach critical mass in titles (maybe a year or two or threee away). But component costs (flash and multi-touch screens for ipods) will also be a gating factor, so I think it will be more like two years before the hardware wow is there to worry about the library.



    As for the MBA: why not pay another $200 and get a better spec'ed laptop (larger screen, disk, processor speed)? I carry my 12" Powerbook in a briefcase, and while I was interested in what a light MacBook might offer, it was too little for too much (and I'm glad I work out at the gym).
  • Reply 15 of 39
    jwdawsojwdawso Posts: 355member
    Quote:
    Originally Posted by JeffDM View Post


    I think it's called "Red Box" in my area. I think it's $1/night.



    I average less than $2/rental with Netflix and there's no time bomb. I've even kept movies for six+ weeks on two different occasions, one I've watched a couple times, two weeks apart, the marginal cost of that movie sitting around vs. not having that extra would be $5. The same with iTunes would have been $10.



    Still, I think 30 days is fine, but only 24 hours to finish might be a bit tough for people. If you start at 8pm one night and can't finish that night, you need to finish it before 8pm the next night. Even 28 or 36 hours would be less of a noose.



    Okay - come clean! Show us the math. Do you work for a living? Do you do nothing at home but watch movies?



    Seriously, I have Netflix and a Blu-ray player, and find it very convenient. However, a subscription probably skews the math, because we are motivated to turn them around fast. If I didn't have a subscription, I would probably view fewer movies and watch more HD free content. So the value equation is not straight forward. For instance, renting 2 HD movies/month via Apple TV and watching "free" HD content, compare to 8 Netflix HD movies, and watching less free content. Which is better? Keep in mind the free content may be HD hockey/basketball/nfl/etc. What if I change "free HD content" to going out to dinner with my family (or just my wife???). Having a Netflix subscription somewhat defines what I do with my free time. Renting from Apple removes this type of "constraint".



    I haven't worked this through yet for myself, but right now I still have Netflix. What about anybody else - is there really a "subscription tyranny" that consumes our free time?
  • Reply 16 of 39
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by JeffDM View Post


    Still, I think 30 days is fine, but only 24 hours to finish might be a bit tough for people. If you start at 8pm one night and can't finish that night, you need to finish it before 8pm the next night. Even 28 or 36 hours would be less of a noose.



    While almost all of the people renting will surely fall into the category who watch a movie all at once, I do like the idea of 36 hours so you can continue a second night if need be. Blockbusters new movie rentals are two days, but that isn't 48 hours because they are due my noon on that 2nd day, and if you rent them at night you have as little as 35 hours to get it home watch it and have it returned. But that is a good measure since you can hold onto an iTS rental for 30 days. The only think that I think will eventually change is when new movies become available on iTS.
  • Reply 17 of 39
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by jwdawso View Post


    Okay - come clean! Show us the math. Do you work for a living? Do you do nothing at home but watch movies?



    Seriously, I have Netflix and a Blu-ray player, and find it very convenient. However, a subscription probably skews the math, because we are motivated to turn them around fast.



    Not for me. It's $16/mo for three out. If I watch one movie on Friday night and one on Sunday afternoon/night, that's 8 movies a month, making it to $2/movie. I guess I really don't go much lower than that, but if I did the 2-out plan, watched two movies a weekend and one TV series DVD during the week, that's close to $1/disc, though that's really pushing it given the turn-around time.



    Quote:

    I haven't worked this through yet for myself, but right now I still have Netflix. What about anybody else - is there really a "subscription tyranny" that consumes our free time?



    That's not really a problem for me. On some weekends, I don't watch anything at all, depends on how busy I am, but other weekends, it might be three movies, my free time can vary a lot depending on what I feel like doing and what's available.



    If I only watched 4 movies a month in HD, Netflix would be a better deal, and that's about my minimum.
  • Reply 18 of 39
    g3prog3pro Posts: 669member
    Quote:
    Originally Posted by jragosta View Post


    Fortunately, the real world isn't that pessimistic. That would require Apple stock to drop by more than a third - after a 5 or 6% drop yesterday. It would take far worse economic conditions than we're likely to see for the market to drop that much.



    These things don't happen overnight. The NASDAQ is down 10% since the beginning of this year. We're starting to get some really bad data from the housing markets, financial markets, job markets, industry production, inflation rate. It's starting to sink in for the most part, and there really are not any good news items to buoy the sinking ship.



    Also keep in mind that AAPL increased 70% last year. One third doesn't seem that far to fall.
  • Reply 19 of 39
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by solipsism View Post


    While almost all of the people renting will surely fall into the category who watch a movie all at once, I do like the idea of 36 hours so you can continue a second night if need be.



    Most of the time, all at once should be fine, but I've had to stop on occasion due to other things, getting a phone call to do somthing or someone watching doesn't want to finish it, so I'd have to finish it later.
  • Reply 20 of 39
    Quote:
    Originally Posted by tundraboy View Post


    Blockbuster is dead.



    I'm curious why you think this? Blockbuster's Total Access program is very comparable to NetFlix (if not better IMO). I like the fact that you can return a movie you received in the mail to a Blockbuster location and get a free in-store rental. That way you have another movie to watch while waiting for the next one in the mail to arrive.



    I typically rent 4-5 movies a month at only $12.99 a month, it appears to be cheaper for me to stick with Blockbuster than move to iTunes Movie Rental.
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