Apple is enjoying a relief recovery of sorts today after a rough and tumble week last week characterized by the highs and lows of new products and rumors about Steve Jobs and his health. Today, it's a decidedly different flavor after traders tried to take a bite out of Apple.
It started with a note from Mike Abramsky at RBC Capital, now calling for a "breakout" fiscal fourth quarter because of iPhone. He's estimating Apple will sell 14 million iPhones in 2008, thanks to last week's new 3G version. It gets better; Abramsky sees iPhone developing in much the same way as iPod when Apple sold 14 million of those in its fourth fiscal quarter in 2005. Chalk it up to a better performing device, at a cheaper price, and that's a powerful one-two punch of momentum that investors apparently have been wanting to hear.
At the same time, Pablo Perez-Fernandez, the wireless analyst at Global Crown Capital, issued a note this morning reiterating the difficulty that iPhone presents for Motorolawhich is already feeling its fair share of problems. Palm's Centro is selling well, and its new deal with Verizon, and its smartly colored new smartphone, are both positives for the company, but there are some inherent structural issues facing the company that eclipse Centro's success, at least for now. Perez-Fernandez doesn't expect a meaningful turnaround until much later this year.
That leaves Apple, Research in Motionand Nokia. No slouches, any of them, and one's success doesn't necessarily come at the expense of the others. In other words, the smartphone market is generally so new, and the opportunities for growth so great, that all three could stand to see a fair amount of robust sales. Simultaneously. That means just because RIM is upgraded by one analyst, doesn't mean that Apple has to be downgraded by another.
And then all of this comes as downloaded video (see earlier post on Hulu), also becomes an even bigger deal, and an even bigger deal for mobile devices. Which plays directly into the increasing strengths of the iPhone 3G. That spells momentum. And that spells more opportunity for investors willing to plunk down some cash--and time--as Apple, and the iPhone continue to evolve. As analysts start to get their arms and heads around Apple's longer term prospects (and I've only given a cursory mention to iPod and haven't even mentioned the enormous growth enjoyed by the Mac), investors will likely be handsomely rewarded.
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