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Thanks to iPod, Apple's Rolling in Gravy

By Cynthia L. Webb
washingtonpost.com Staff Writer
Tuesday, November 23, 2004; 10:09 AM

For Apple Computer, it's a no-brainer what to be thankful for: its wildly popular iPod.

While saying grace over the holiday spread, the tech company's executives might toss in a "thank you" for influential Wall Street analyst Gene Munster, whose rosy report on the ability of the digital-music player to spur other Apple product sales helped drive the stock up yesterday as high as $64 a share, a four-year high. Shares closed up more than 11 percent at $61.35.

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More Past Issues

The price climbed "after a major Wall Street firm nearly doubled its price target on the stock, saying that customer satisfaction with its iPod music player is creating 'wildfire word-of-mouth marketing' for its Mac computers and other products," the Associated Press reported. The $64-a-pop price beat "the 52-week high of $56.91 set Friday. This is the highest the stock has been since September 2000. The year-low of $19.25 was set Dec. 22. In a research note Monday, Piper Jaffray analyst Gene Munster raised his price target to $100 a share from $52 and reiterated an 'outperform' rating on the shares." Munster "projected the value of the firm's shares will reach $100 based on surveys that show iPod music players are also enticing customers to switch to Macintosh computers," the San Francisco Chronicle explained.

Munster already gave iPods a major nod last month when he noted that they were topped on teens' wish-lists only by clothes, money and cars. In Monday's note, he wrote that 13 percent of iPod owners his firm surveyed were formerly PC users, but since buying an iPod "have already either purchased a Mac (6 percent) or are planning to buy a Mac within 12 months (7 percent)," according to the AP. More details from Bloomberg: "Of the 200 iPod users surveyed, 199 said they were satisfied with the product, said Munster, who does not own Apple stock. 'People love them,' Munster said. 'They go into Apple stores and talk to their friends about Apple. That's going to create a 'halo' effect for their core business.'"

"Taking a conservative stance and accounting for possible error, the analyst cut the estimate suggested by the survey in half, putting at 6.5 percent the expected increase in Mac sales by iPod users and reflecting the rate of carryover in his fiscal 2005 and fiscal 2006 estimates," according to an AP/Dow Jones report picked up on the Boston Globe's Web site.
The San Francisco Chronicle: Sweet Music Plays For Apple
The Associated Press via washingtonpost.com: Apple Stock Jumps to 4-Year High on iPod (Registration required)
Bloomberg via The Seattle Times: $100 for Bite of Apple? Stock Ripe to Double, Analyst Says
AP and Dow Jones via The Boston Globe: Apple Hits 4-Year High; Apple Seen Lifting Sales

Don't Hate the Player

Here are some of the numbers behind the iPod's runaway success: "The iPod and iPod Mini digital music players have become the Macintosh computer-maker's hottest-selling products. The company shipped more than 2 million iPods during the fourth quarter, and Piper Jaffray and other Apple observers are projecting that number will double during the current first quarter," the Chronicle said. And here's more data from the report, which Apple's marketing department must be doing cartwheels over, since you can't pay for plugs this good (or let's hope not). "A Piper Jaffray survey of 200 iPod users from around the country showed 199 were satisfied with the device. Some of those surveyed gave glowing comments such as, 'The iPod has changed my life,' 'The iPod is the best invention ever' and 'I want to date my iPod.'"

The San Jose Mercury News reported that Munster "revised his projections for Apple on the strength of interviews with Apple resellers and a survey of 200 iPod-toting consumers, approached at random in New York, Minnesota and California. Its consumer survey found that all but one person had strong positive experiences with the iPod, which has a 65 percent share of the market for portable digital music players. ... Munster said that kind of consumer satisfaction has two implications. It will turn iPod owners into advocates, who persuade their friends to buy iPods. And it will encourage people who have never used an Apple product before to switch to Macintosh computers. 'The halo effect is real,' said Munster, referring to the automobile industry term for a hot car that attracts buyers to an entire product line."
The San Jose Mercury News: Apple Shares Rise to Four-Year High (Registration required)

The AP/Dow Jones round-up hinted that others are bullish on Apple's future, too. "Fulcrum Global Partners analyst Robert Cihra boosted his December quarter revenue estimate to $3.23 billion from $2.86 billion, and now sees earnings of 50 cents a share instead of 41 cents. He raised his share price target to $65 from $53, saying he expects iPod shipments to double quarter over quarter to 4 million units, driving revenue 300 percent higher than last year."

But another prominent analyst wasn't drinking the same Kool-Aid. "Roger Kay of the research firm IDC said Piper Jaffray's $100 target price seemed 'out of whack' because Apple's share of new computer sales globally has hovered around 2 percent for the past three years with only slight seasonal variations," the San Francisco Chronicle said.

Visas, Everywhere You Want to Be

Foreigners with high-tech credentials could get in on a new expansion to the U.S. high-tech visa program -- a move lauded by a number of high-tech companies, but reviled by some labor unions. "Congress is letting employers hire 20,000 more foreign high-tech workers under a special visa program after businesses reached the annual ceiling on the first day of the government's fiscal year," the AP reported. "Businesses are limited to hiring no more than 65,000 workers annually through the H-1B visa program. They reached that figure in one day, Oct. 1, and immediately began saying they would lose talented university graduates and potential employees to competitors overseas. In response, as part of the $388 billion spending bill passed over the weekend and awaiting President Bush's signature, Congress is exempting from the limit 20,000 foreign students with master's or higher degrees from U.S. universities." A coalition including Microsoft, Texas Instruments and Hewlett-Packard, pushed for the exemption, the AP said.
The Associated Press via washingtonpost.com: More Visas For Foreign Workers (Registration required)

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