Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I agree that this estimate of the Music Store revenues/earnings is pretty much wishful thinking. It ain't going to happen.
What happens if MSFT decides to crush Apple in the Music download business? They can do it if they really wanted to.
Also, most music is not paid for but gotten for free. This isn't going to change with the masses. Apple has sold 30 million songs and 2 million iPods. That is only 15 songs per iPod. Those of us that purchase our music is a very small percentage of iPod users. Most iPod users are downloading over Kazaa.
I saw a reporter the other day admit he had over 20,000 songs in his collection. I wonder how many were legally obtained. My brother has over 200GBs of MP3s (none of which were paid for).
Anyway, I think it is iPod sales that will add 85 cents to the bottom line and not any music download service. Let's be realistic.
Kevin
Wrong person to ask about an AAPL entry point. I'm the new AAPL super bull. I'd be buying now, but there is a lot of technical resistance at $25. If I'm wrong about the quarter or the future guidance, AAPL might not punch through $25.
It has happened before and recently. Last quarter, the stock ran almost to $25 and then because the December quarter guidance was considered too low, the stock began correcting down to the SCREAMING BUY level. Not even all the good news about iTunes and iTMS for Windows boosted the stock (like it should have).
So, Apple is going to have to deliver some very good numbers on Wednesday. I think the revenue number needs to exceed $2B and the guidance needs to be over $1.8B for this quarter.
Place your bets...
Kevin
Profit taking happening today. I wouldn't be surprised if we closed in the red.
Long and strong...
Kevin
Yes, the supplier can put a lot of pressure on the distributor to not cut prices, and there is nothing that requires a supplier to continue supplying a distributor (unless restricted by contract). But, the supplier cannot require the distributor to sell at a fixed price. I think that is very clear.
I've done enough OEM agreements to know that the bigger companies (like IBM, that we have done some deals with) are very sensitive to anything that smacks of "price fixing".
Kevin
Its called "price fixing" and is very illegal. That is why you always see "MSRP" where the S stands for "Suggested". Apple has at times come pretty close to being guilty of "price fixing". They severely punish any retailer that advertises a price below the "minimum advertised price" that they set. I know they won't honor the warrantee if the retailer sells you the product at more than 20% off the MSRP. (A good number to know if you are negotiating the price of a Mac with your retailer).
Kevin
There goes $24... Next up, $25... Next week...
Kevin
No buying opp in AAPL yet. What a shame. I really want more...
Rest of my stocks are red though...
Kevin
It is going to be interesting to see how the employment number affects the markets today. I have a feeling that the markets are in such a bullish mode that they will quickly shake off any selling on this news and will continue to set new highs.
Therefore, if AAPL goes below $23, I'll be a buyer again.
Kevin
Looks like the rally in the Nasdaq is over for today. Lets see how long it takes to shake off the disappointing employment number.
Kevin
I'm convinced that Apple should see upgrades and a significant rise in share price this month. So far, it is up about 15%. Many many stocks have had a better run (setting new highs) during this same period. So, I'm convinced this rally is just starting and not anywhere near a top.
Seems dumb to sell when you feel the shares are worth much more.
Of course, taking a little profit is never a bad thing, but I still think AAPL is a BUY here and not yet a SELL.
Long and strong...
Kevin
Paper: I don't have any problems sleeping, but you are right that I am overexposed. I never wanted to go on margin and now I find I've got some AAPL shares on margin. I have many times my normal position in AAPL shares and I seem to be buying all the way up.
The story is too good right now.
That said, my trading account is up big time this week (on paper). Every $100K it is up, I tell myself I should just liquidate the entire account and take a long vacation. I'm having these thoughts every day now as it just jumps and jumps.
Anyway, I'm going to let it ride, but I do want to unload the extra 10K shares I bought today (a small token to the trading gods). I even had a sell order in for a $5K profit on those today placed immediately after I bought them and it came within a penny of triggering.
Let's see how it acts in the next few days. We have been very fortunate that the NASDAQ is up 5% this week.
Kevin
"Or is it just that HP has access to and hits completely different market segments and channels."
Bingo!
HP is one of the largest sellers of PCs to consumers and their peripherals are in all kinds of retail outlets. The HP iPod will be available for sale in more places then ever and it will have the HP brand associated with it. Many people will buy an HP computer as their next computer and while they are at it, pick up an HP iPod (or return to the same store to buy the HP iPod or to buy the HP iPod instead of a new computer).
Kevin
I think Real Networks is going to be a bit pissed over the Apple/HP alliance. Their suit against Microsoft was based on the fact that Microsoft prevented deals like this. Of course, the law suit is probably one reason that Microsoft allowed this to happen (or that HP felt it could do this type of deal).
Also, I was wrong about what the "exclusive deal" means. It means that HP will not promote any other online music service on its desktop. It doesn't mean that Apple won't be able to do the same deal with Dell if they come to their senses.
I'm going to sleep like a baby tonight...
Kevin
Let's pray the jobs data tomorrow isn't disappointing. The NASDAQ closed at 2100 today and at some point, there will be a correction to digest these gains. Disappointing jobs data might be the trigger...
Of course, I'm convinced the economy turned and is going at full throttle now. But, jobs have certainly lagged and might take some months to really gather any positive momentum.
Kevin
What we need now is an analyst upgrade before earnings. Most have a HOLD on the stock so it wouldn't take much to bump up one notch. The HP deal may give enough cover to let them upgrade.
Then, we need blow out earnings and three or four upgrades from the lemmings. If we get the upgrades, I'm not selling much until the full effect of the upgrades are reflected in the stock.
Kevin
Carly interview on CNBC didn't do much to boost Apple. She hardly mentioned it. She kept the focus on what HPQ was doing in the consumer area, with the Apple deal only being a part of it.
Kevin
Did you catch this?
"The deal with HP involves only the traditional iPod design and not the new iPod Mini models, which use a 1-inch hard drive that has 4GB of storage, Schiller said; though, he added, that's "obviously something we can look at in the future."
Schiller would not say whether Apple may look to craft similar deals with other computer or electronics makers. While that part of the deal is not exclusive, Schiller said HP's promotion of the iTunes Music Store through its PCs is a "multiyear, exclusive" deal."
What does it mean that the "promotion of the iTunes Music Store is exclusive"?
Does it mean that Apple can't do iTunes bundles with other PC manufacturers? I suppose not. Maybe just the Music Store short-cut on the desktop?
BTW, it is interesting that this deal is to make the April 2003 iPods (3rd generation) in HP Blue and doesn't cover the new iPod minis.
Kevin
Lots of selling going on now. Up a dollar really brings out the profit takers...
Kevin
baldrick: A little town called Warminster... training our allies to fight the good fight...
Kevin
Its not too late to hop on although you would have been better to hop on a few weeks ago when AAPL was a SCREAMING BUY under $20. The blowout earnings being reported next Wednesday will keep the trend going for a while. I've seen it once before in AAPL (the last time AAPL had a $2B December quarter).
Still, there are lots of other stocks moving up in this environment.
Kevin
I'm afraid the HP deal is not going to stop MSFT from moving into the Music business. MSFT is the 800 pound gorilla.
Remember that HP (specifically Compaq) embraced Palm with iPaq but that certainly didn't stop MSFT from following up with PocketPC.
Still, I'm liking the news a lot. Wish they would do a couple more...
Kevin
I couldn't help myself and I added 10K to my AAPL position at $23.18.
I'm feeling like I should add more, but my position is getting a bit ridiculous.
I'm going to sell these 10K shares quickly though as they are bought on margin.
Kevin
This HP news is simply huge! I feel like doubling my position in AAPL, if I could afford it.
I have criticized Apple for not partnering enough with iPod and iTunes (AOL deal being the exception). Well, HP sells tons of computers and this is a real positive for Apple (and a blow to Microsoft's WMA strategy).
Now, if Apple could just bag Amazon ... Maybe even WalMart will change its mind and start selling iPod minis and pushing ITMS for its customers...
Kevin
Oops! The yahoo link seems down. Here is another:
http://www.apple.com/pr/library/2004/jan/08hp.html
Kevin
Huge news!
Apple partners with HP!
http://biz.yahoo.com/prnews/040108/sfth099_1.html
Kevin
Thanks for the TA update. I'm feeling no urgency to sell yet.
Kevin
Another good day in AAPL-ville... Also, my SUNW and SGI are running wild. This is just too easy.
Kevin
Cotton - Real requires QuickTime to be installed to do the authentication for the DRM to play an iTunes Music Store song. They basically do it under the covers. As for moving these songs to the iPod, I think a user would just use iTunes for that.
Still, it is nice to have compatibility... But, it isn't going to let you get around Apple's DRM (which can be easily gotten around by converting to AIFF and then back to unprotected AAC or MP3).
Kevin
For a guy described as a "visionary", Jobs the businessman is locked into myopic tunnelvision over the next dollar at the expense of the future.
I think Steve is convinced that the lead Apple has in digital music is so immense, that Apple doesn't need to compete aggressively on price.
He believes, rightly or wrongly, that the market will gravitate to the best end user experience. He has said repeatedly that what Apple has done is "very hard" to do and that his competition don't have well thought out business plans.
I really think he thinks that there will be tons of competition jumping into this area as it inevitably grows (in 10 years, who is going to be buying their music on prepackaged CDs? The music will all be digital.) But, he thinks Apple will crush these newcomers because Apple has the resources to invest in the R&D needed to stay number 1 and these others don't.
So far, he seems to be correct, but Apple hasn't embraced the low end player market yet (mainly due to Steve's insistence on the end user experience where only multi-GB devices are acceptable to him) and Apple hasn't done much partnering (the AOL thing was the exception so far).
I really would like to see a partnering agreement with Amazon.com. Seems like it would be a natural. Click to buy a real CD (through Amazon) or click to buy the songs through iTMS.
And, I'd like to see mac.com users be able to stream any of the songs in the iTMS.
Time will tell if Apple blows it again. Obviously, Steve Jobs is playing it exactly like he did before, except he isn't going to make the mistake of bringing in an outsider to run the company again and lose control again. He will play it out to the end game.
Kevin
The cheapest is to get a DVD-Rom drive (not a Combo drive). I assumed that Cotton has a spare bay to add the DVD-Rom drive without removing any existing CD-RW drive.
In the PC world, they usually go all the way to a DVD-RW drive or they install two drives (a CD-RW drive and a DVD-Rom drive).
Kevin
Linda,
All new Macs come with either a Combo drive or a SuperDrive. No need for Cotton to get an external. He should be able to pick up a new internal DVD-Rom drive for around $30 or a Combo drive for just a little more.
He just needs to install it and he should be good to go.
Kevin
Some of the analysts think GarageBand is a big deal:
http://www.siliconvalley.com/mld/siliconvalley/7652551.htm
""You look at an application like GarageBand -- you can't get that on another platform at any price,'' said Michael Gartenberg, analyst with Jupiter Media. "People will buy Macs on the basis of GarageBand.''
and, apparently, the new iPod mini uses the more expensive Hitachi drive than the new Cornice drive which could really cut the price of the iPod mini:
Phil Schiller, Apple vice president of worldwide product marketing, also said Apple had not ruled out making an iPod at capacities smaller than 4GB. There are various 2GB drives that Apple could use in a less expensive iPod, and the company has recently focused on convenient ways to sync music from iTunes to the iPod players.
Kevin
Buy a hundred shares of AAPL today on margin and then when it goes up 20 cents plus enough to cover your expenses, SELL!
That way, you will have your $20 and don't have to sulk about Apple not honoring a coupon that was clearly designed to get you to buy something that would contribute to last quarter's earnings.
I do this for all my "luxury" Apple purchases.
Kevin
I think 750,000 iPods was the high end for most analysts (450,000 was the low, but I don't think many had plugged in that low a number).
I have a feeling that most analysts think that the Mac business is declining and that while the iPod business has surged, it is largely due to Apple having "first mover" status and that the competition will cause Apple's market share to decline significantly.
Indeed, most analysts have a Hold recommendation (a polite way to indicate "Don't get into this stock!").
I think the G5 sales were pretty good (compared to the poor G4 sales in recent quarters), but I think there is concern over the consumer's continuing to buy iMacs and iBooks. I believe the LCD iMacs are way over priced (and under powered) and this might kill the quarter. I hardly see anyone buying LCD iMacs any more at the Apple store.
Also, on CNBC yesterday, when the reporter asked about the quarters results, all Steve would say is that he thought they did pretty good (not much enthusiasm). Steve focused mostly on iPod results in the interview. Indeed, I got the feeling that if Apple became a Digital Music only vendor and moved on from the Mac, it would okay with him.
Anyway, we will hear the new guidance (if any) next week from Apple. This past quarter is now history.
Kevin
The funny thing about pricing is that I would have preferred that Apple price the low end iPod and the iPod mini at the same price than the way it is now.
That is, they should have lowered the price of the 10GB iPod to $249 or upped the price of the iPod mini to $299.
Then, the message is clear. If you want more music capacity, get the iPod. If you want something smaller, get the iPod mini. Price wouldn't be a consideration since they would both be the same price.
Indeed, maybe that is all it would take to satisfy me. Reintroduce the 10GB iPod at $249. Then, pricing seems sane again:
iPod mini - $249 for the smaller is better, colors are cool crowd
iPod 10GB - $249 for the bargain hunter
iPod 15GB - $299 ($50 for 5GB seems like a fair upgrade)
iPod 20GB - $399 ($50 for 5GBs more and $50 for the extra peripherals)
iPod 40GB - $499 (for the top of the line crowd)
Anyway, I guess I've beat this horse enough. My main point was there is too much distance between the iPod mini and the iPod 15GB in capability but too little distance in the price. Funny thing is that the pricing would have made more sense to me if they hadn't introduced the 15GB and just left the 10GB at $299. But, I guess the competition (from Dell, and others) made them do the capacity bump.
Kevin
I have no problem with the $249 iPod mini price if there wasn't a $299 15GB iPod (except that the iPod mini does not compete at this price with the Flash players, regardless of what Steve tried to put over on us).
I've done a lot of pricing in my time for commercial products. The price has to be rational across the entire line for it not to be an issue with the buyer. It is true that you usually want to price that the customer will choose the middle model (and you want to make sure the middle model gives you good profit), so maybe Apple doesn't mind that the current pricing makes the 15GB iPod seem like the bargain.
It would have been better from an overall pricing point that the iPod mini sell for $199. $50 is just not enough of a gap.
Kevin
After thinking about it overnight, I think Apple made a mistake in pricing the iPod mini at $249. It was probably done because that is the price they can make them for and still maintain their margins.
The logical price would have been $199.
Moving the low end iPod to 15GBs just makes this pricing more confusing. Of course, maybe users will now see the low end iPod as the bargain and purchase more of those.
As it is, the iPod mini doesn't seem to be positioned against the cheaper Flash Memory MP3 players. Indeed, these players are still cheaper. The iPod mini is just a lower end HD player, so all Steve's comparisons to that Rio was just smoke.
I bet Apple really had a 2GB model in the works for the under $200 price, but then couldn't build it for much less than the 4GB.
Also, having so many colors is probably a bad move. Yes, it does give customers a choice at the point of sale (which is a good thing), but I'd rather see them have a base color and a "color of the month". Retailers aren't going to like having to keep 5 times as many in stock just to cover the color choices.
I suppose this is just a continuing indication that Apple doesn't care much about their retail partners and are content with moving more and more sales direct through the Apple Store (where the volumes justify keeping 5 different models in stock only varying by color).
Kevin
This strikes me as good news. It means that one other major service will now support the AAC format. It also means that Mac users will have access to Real's subscription service for streaming music (a great bargain for music listeners who have broadband internet access for a good period of the day).
Too bad Apple would not license FairPlay to them so the DRM would be compatible. I guess Apple still has the desire to keep its service proprietary and not compete in a compatible world (as far as file formats are involved).
Still, this is a positive thing for us Mac users.
Kevin
Be sure to turn on "Use Interference Robustness" on all your clients to minimize (avoid) interference fro 2.4GHz phones. This feature automatically switches you to a different channel in the 2.4GHz range when it detects the phone is active.
You might need an Apple base station (I'm not sure if all the other base stations have implemented this feature).
Kevin
Have you seen the size of the iPod mini? It is truly small. I'd buy small over the big iPod any day. Remember how clunky the original iPod was? Sales really took off last April when they changed to the new slimmer iPod.
If you want a big clunky MP3 player, dude... Get a Dell!
I'll pay for the smaller size and still get 1000 songs on it (100 CDs).
Also, Apple is making a good move by making people buy the accessories. When I buy mine, I'll buy the $100 or so in extra accessories which makes Apple money and I will still view my purchase as a bargain at $249.
Kevin