Citigroup lifts Apple with new product predictions
Despite a number of product transitions that are conspiring against Apple Computer during its current (March) quarter, analysts for Citigroup said on Monday they expect new products introduced around the company's 30th anniversary in early April to fuel a rebound in the next quarter.
"We are upgrading shares of Apple this morning from Hold to Buy with a twelve-month price target of $82," wrote analyst Rich Gardner in a note to clients. The upgrade helped Apple shares gain nearly 5 percent in early morning trading.
Predicting a "slue of new products" will be introduction within the next six months, Gardner recommended clients begin to build positions in Apple shares.
"We expect a fairly eventful announcement around the date of the company's 30th anniversary on April 1," the analyst wrote. "Our checks suggest an Intel-based iBook and a refreshed iPod video with a larger screen and/or more storage capacity."
Gardner also believes the company could use its anniversary to announce that all Apple-branded software has been ported to run natively on Intel Macs, or roll out iTunes service enhancements.
In August, the analyst sees Apple wrapping up its Intel transition with new dual-core Power Macs based on Intel's Conroe desktop processor. The Power Mac announcement, which the analyst predicts will take place at company's annual World Wide Developers Conference, would also coincide with the first public demonstrations of Mac OS X 10.5 Leopard -- the company's next generation operating system due by 2007.
Looking even further in the Cupertino, Calif.-based company's future, Gardner predicts a redesigned iPod nano in the third calendar quarter of the year. "In addition to a new exterior, the industry transition to higher flash densities in [the third calendar quarter] should allow Apple to reduce iPod nano prices by roughly $50," he wrote. "A price reduction at the 4GB capacity sweet spot could drive a meaningful uplift in demand for the product."
Meanwhile, Gardner is just the latest of several analysts providing coverage on Apple who believe the company has revolutionary cellphone design brewing in its labs. "Slightly farther in the future, we expect Apple to introduce a phone with integrated mp3, photo and video capability at Macworld San Francisco in January 2007," he wrote.
According to the analyst, this presumed product pipeline would suggest that most of the risk associated with the Intel transition and iPod transitions will be behind Apple in time for the back-to-school selling season. However, Gardner notes that product transition woes during the March quarter could prevent the company from delivering meaningful upside to consensus revenue and earnings-per-share (EPS) estimates for the first time in several years.
"While Apple introduced Intel-based versions of the iMac, MacBook Pro and Mac Mini in early January and late February, recent channel checks with Apple stores suggest that the most profitable of these products -- the MacBook Pro -- remains in short supply," the analyst wrote. "Almost none of the U.S. Apple stores that we called last week had the MacBook Pro in stock and most still have waiting lists of between 5-50 people for the 1.83GHz version of the product." As a result, he believes Apple may not receive much retail-based revenue from the professional notebook line until next quarter.
He notes that Apple's decision to introduce the MacBook Pro with a base price of $1,999 has created a very large, but temporary, gap in its notebook product line. "The gap between the high-end iBook at $1,299 and the low-end MacBook Pro at $1,999 leaves Apple without an appealing price point in the important $1,499-1,799 range," Gardner wrote. He cautions that Apple's aggressive marketing of the performance improvement yielded by the transition may prompt consumers to defer the iBook purchases during the current quarter, pending an introduction of Intel-based models next quarter.
"Finally, we believe Apple is in the process of reducing iPod Video channel inventories in anticipation of a product refresh during [the second calendar quarter]" the analyst wrote. "While we do not know the exact nature of the new product, we believe it may have a larger screen and/or more storage capacity. Since Apple recognizes revenue on sales into third party retail, this inventory reduction could negatively affect iPod Video revenue during [the first calendar quarter]."
For the aforementioned reasons, Gardner reduced his March quarter revenue and EPS estimates from $4.8B and $0.48 to $4.5B and $0.45. However, Citigroup believes the recent decline in the Apple shares from $85 to $63 has left them priced fairly in regards to near-term risk or lack of positives from recent product transitions.
Citigroup analyst Richard Gardner was one of only very few analysts to accurately predict an Intel-based PowerBook at this year's Macworld expo.
"We are upgrading shares of Apple this morning from Hold to Buy with a twelve-month price target of $82," wrote analyst Rich Gardner in a note to clients. The upgrade helped Apple shares gain nearly 5 percent in early morning trading.
Predicting a "slue of new products" will be introduction within the next six months, Gardner recommended clients begin to build positions in Apple shares.
"We expect a fairly eventful announcement around the date of the company's 30th anniversary on April 1," the analyst wrote. "Our checks suggest an Intel-based iBook and a refreshed iPod video with a larger screen and/or more storage capacity."
Gardner also believes the company could use its anniversary to announce that all Apple-branded software has been ported to run natively on Intel Macs, or roll out iTunes service enhancements.
In August, the analyst sees Apple wrapping up its Intel transition with new dual-core Power Macs based on Intel's Conroe desktop processor. The Power Mac announcement, which the analyst predicts will take place at company's annual World Wide Developers Conference, would also coincide with the first public demonstrations of Mac OS X 10.5 Leopard -- the company's next generation operating system due by 2007.
Looking even further in the Cupertino, Calif.-based company's future, Gardner predicts a redesigned iPod nano in the third calendar quarter of the year. "In addition to a new exterior, the industry transition to higher flash densities in [the third calendar quarter] should allow Apple to reduce iPod nano prices by roughly $50," he wrote. "A price reduction at the 4GB capacity sweet spot could drive a meaningful uplift in demand for the product."
Meanwhile, Gardner is just the latest of several analysts providing coverage on Apple who believe the company has revolutionary cellphone design brewing in its labs. "Slightly farther in the future, we expect Apple to introduce a phone with integrated mp3, photo and video capability at Macworld San Francisco in January 2007," he wrote.
According to the analyst, this presumed product pipeline would suggest that most of the risk associated with the Intel transition and iPod transitions will be behind Apple in time for the back-to-school selling season. However, Gardner notes that product transition woes during the March quarter could prevent the company from delivering meaningful upside to consensus revenue and earnings-per-share (EPS) estimates for the first time in several years.
"While Apple introduced Intel-based versions of the iMac, MacBook Pro and Mac Mini in early January and late February, recent channel checks with Apple stores suggest that the most profitable of these products -- the MacBook Pro -- remains in short supply," the analyst wrote. "Almost none of the U.S. Apple stores that we called last week had the MacBook Pro in stock and most still have waiting lists of between 5-50 people for the 1.83GHz version of the product." As a result, he believes Apple may not receive much retail-based revenue from the professional notebook line until next quarter.
He notes that Apple's decision to introduce the MacBook Pro with a base price of $1,999 has created a very large, but temporary, gap in its notebook product line. "The gap between the high-end iBook at $1,299 and the low-end MacBook Pro at $1,999 leaves Apple without an appealing price point in the important $1,499-1,799 range," Gardner wrote. He cautions that Apple's aggressive marketing of the performance improvement yielded by the transition may prompt consumers to defer the iBook purchases during the current quarter, pending an introduction of Intel-based models next quarter.
"Finally, we believe Apple is in the process of reducing iPod Video channel inventories in anticipation of a product refresh during [the second calendar quarter]" the analyst wrote. "While we do not know the exact nature of the new product, we believe it may have a larger screen and/or more storage capacity. Since Apple recognizes revenue on sales into third party retail, this inventory reduction could negatively affect iPod Video revenue during [the first calendar quarter]."
For the aforementioned reasons, Gardner reduced his March quarter revenue and EPS estimates from $4.8B and $0.48 to $4.5B and $0.45. However, Citigroup believes the recent decline in the Apple shares from $85 to $63 has left them priced fairly in regards to near-term risk or lack of positives from recent product transitions.
Citigroup analyst Richard Gardner was one of only very few analysts to accurately predict an Intel-based PowerBook at this year's Macworld expo.
Comments
Originally posted by canadianmacguy
Although it sounds like Citigroup is doing their Apple research by reading the rumor boards..
bingo.
these apple prophets keep rehashing the same rumors for months and months over and over again. sometimes even years (apple cell phone rumor has been around for years. wishful thinking i guess.)
and when they are right it is usually because they just predict a bunch of things! so they have to be right in part of what they say. sort of like horoscopes.
they just say pretty obvious stuff.
of course apple is releasing a new ibook. of course a new ipod is coming. with larger screen, ooh big news. what else would you expect?
"Hi and welcome to this apple special event. i want to introduce the new video ipod, it has a smaller screen"
We, as a collective, debate and rehash probabilities and predict their outcomes.
So, very often we get it right. Or, we get the news 1-3 days ahead of everyone else.
In terms of the financial markets, 2 days is an eternity.
Yes, I also own aapl.
Originally posted by TednDi
Yes, in their defense, the people who research apple for a living do read the boards. They try and get as much info as they possibly can. These rumor boards are one of the best sources of apple info.
We, as a collective, debate and rehash probabilities and predict their outcomes.
So, very often we get it right. Or, we get the news 1-3 days ahead of everyone else.
In terms of the financial markets, 2 days is an eternity.
Yes, I also own aapl.
Way back in the "early days" of the internet, there was a site called something like Idea Futures where you got a certain number of credits per week, and could buy and sell "shares" from other traders. Shares would be something like, well, one I created was KSNU - "Korea's North and South nations will unify" and have some expiration date.
It was interesting to see the movement in the shares and how they reflected popular belief in certain ideas and where they would lead. (There was also speculative trading on what people thought people would think, of course.) Seems like the Mac rumor scene should re-create this concept for each Apple Event.
Guesses on the rumor boards are bound to come true at some point in time. At least for a few of the ideas.
The analysts do talk to those who know more than the people working for the rumor sites, except when they get a piece of info from some employee who shouldn't have released it.
I've also been told that sometimes a site will buy the research report before it is made public, just as anyone who is willing to pay for it can do.
I think even through this transition year apple will outgross last years profits!
But it also worth nothing that I think 2007 will be a huge year for apple, "the year of apple". I'm going to go out on a limb and say that by Macworld 2008 apple will have 10% market share in the U.S. as far as computers are concerned. Maybe more, depending on the ideas up their sleeves!
And I think 2007 will see the arrival of an apple cellphone. Apple has proved it before, it's not afraid, Steve's not afraid to take risks.
Originally posted by TednDi
Yes, in their defense, the people who research apple for a living do read the boards. They try and get as much info as they possibly can. These rumor boards are one of the best sources of apple info.
We, as a collective, debate and rehash probabilities and predict their outcomes.
So, very often we get it right. Or, we get the news 1-3 days ahead of everyone else.
In terms of the financial markets, 2 days is an eternity.
Yes, I also own aapl.
In short, we do their job for them and they get paid handsomely to regurgitate it in a more finanical approach.
Originally posted by AppleInsider
"The gap between the high-end iBook at $1,299 and the low-end MacBook Pro at $1,999 leaves Apple without an appealing price point in the important $1,499-1,799 range," Gardner wrote.
So what, may I ask, is the 12" Powerbook G4 at $1499? A figment of my imagination?
Originally posted by mdriftmeyer
In short, we do their job for them and they get paid handsomely to regurgitate it in a more finanical approach.
That's wishful thinking.
If anybody knows any rumors when a bluetooth iPod will appear please let me know, I am holding off upgrading my 60 GB color till then. (I hope it wont be too long, I like the video feature on 5G iPod).
Originally posted by zpisnon
Please Apple announce an iPod with a bigger screen and bluetooth!!! PLEASE!!!
If anybody knows any rumors when a bluetooth iPod will appear please let me know, I am holding off upgrading my 60 GB color till then. (I hope it wont be too long, I like the video feature on 5G iPod).
Why would you hold off buying something because of rumors?
Most rumors are wrong. If you're happy with what you have now, then hold on to it. If not, then upgrade to a newer model that has the features you want.
But don't ever count on a rumor.
The best that can be said now, is that Apple will be having a big event late March to early April to celebrate their 30th anniversary. They have already mentioned this recently. The assumption is that they will release new products.
That's not so far away, so wait 'till then. But, if they don't come out with what you want, then don't chew your fingernails over it. you can wait forever for what you want, and never get it.
Originally posted by melgross
Why would you hold off buying something because of rumors?
Most rumors are wrong. If you're happy with what you have now, then hold on to it. If not, then upgrade to a newer model that has the features you want.
But don't ever count on a rumor.
The best that can be said now, is that Apple will be having a big event late March to early April to celebrate their 30th anniversary. They have already mentioned this recently. The assumption is that they will release new products.
That's not so far away, so wait 'till then. But, if they don't come out with what you want, then don't chew your fingernails over it. you can wait forever for what you want, and never get it.
I want the bluetooth option, more then the video option, so I think I will wait till then. I am just hoping that the wait wont be too long.
Originally posted by zpisnon
I want the bluetooth option, more then the video option, so I think I will wait till then. I am just hoping that the wait wont be too long.
Well, in that case... It's not likely that we'll see one soon.
Originally posted by melgross
Don't forget that the rumor boards are also fueled by these analysists.
Anyone familiar with the notorious "Blueskymining" on the Yahoo message boards? He is "famous" for his anti-AAPL rants...
Apple just introduced the leather cases for the fifth generation iPod that ARE NOT EVEN SHIPPING YET!
Do you really think they will roll out the 6th gen iPod before the cases for the fifth gen even hit the shelves?
Analysts are schmucks...
Originally posted by solsun
There IS NOT GOING TO BE A NEW iPod INTRODUCED ANYTIME SOON...
Apple just introduced the leather cases for the fifth generation iPod that ARE NOT EVEN SHIPPING YET!
Do you really think they will roll out the 6th gen iPod before the cases for the fifth gen even hit the shelves?
Analysts are schmucks...
Who knows!
I'm keeping my expections low. We could very easily get carried away!8)
This is Apple wwe are talking about, so no one really knows. They issued a new iMac (intel) right after the last release, the nano replaced the hugely popular mini, and, well, everyone knows about the iPod pico and the iPod invisa from Saturday Night Live fame!
Originally posted by mdriftmeyer
In short, we do their job for them and they get paid handsomely to regurgitate it in a more finanical approach.
Good job if you can get it.
Originally posted by TednDi
They try and get ...
Argh! They try to get ...
Written English - Glossary of Correct Usage:
8. sure and try are not followed by and.
Wrong: Be sure and study for the test.
Right : Be sure to study for the test.
Wrong: Try and get some rest.
Right\t: Try to get some rest.
Originally posted by SpamSandwich
Anyone familiar with the notorious "Blueskymining" on the Yahoo message boards? He is "famous" for his anti-AAPL rants...
Same as the VersionTracker BSM?