Apple's Back-to-School Bonanza

Back to school
Back to school

There has been so much written about Apple and the iPhone recently: the 3G issues, the MobileMe mess, the so-called Apps Kill Switch controversy, the iPod and its battery/BBQ issues, the company's $20 billion in cash, and a stock that continues to try to scratch and claw its way back from the doldrums.

What investors ought to be focusing on, instead, is the back-to-school shopping season, and what some say could be Apple's most aggressive seasonal campaign ever.

Piper Jaffray's Gene Munster for one anticipates some big news: A new, sub-$1,000 MacBook; new MacBook Pros at substantially lower prices; a new, expanded memory iPod Touch at $199; and new lower prices on other iPods.

What else? Maybe a co-branded Weber Grill/Nano? (Cheap shot. Kidding. Don't flame me.)

Yes, I called Apple. No, the company doesn't comment on rumors and speculation.

But the fact remains: This is the time of year that Apple begins to surge. Back to School is big, and its new iPhone relationship with Best Buy certainly can't hurt.

And once we're through Back to School, we turn our attention to the holiday shopping season. Munster points out that Apple is typically up 40 percent between now and the end of the year, saying, "The economy has not been good, but they're still growing their Mac business at 40 percent-plus, when the Street was modeling 20 percent."

Consider that in 2004, Apple shares started the year at around $11.50 and hit $17.17 by mid-August. From August to December, they jumped from $17 to $32, or almost doubled.

In 2005, Apple shares opened the year at $35, hit $45 in August, and then jumped to $72 by year's end, better than 40 percent.

In 2006: opening the year at $76, dipping to $68 by August, and then reaching $84 by that December, or about 40 percent again from August to December.

Last year, Apple began 2007 at $85, jumped to $138 by August, and scampered another $42 a share between August and December, or a little less than 40 percent.

This year, Apple shares started at $194 in January, dipped as low as $130 a few short weeks later, and are now at $173. Tack on another 40 percent, or the average gains Apple has seen between now and the end of the year since 2004, and you're looking at a $241 stock -- or a few bucks ahead of Andy Hargreaves' $235 target over at Pacific Crest Securities.

As we all know, past performance is no guarantee of future returns. But historically, Apple has risen to the occasion, performs and delivers. Fundamentally, technologically, I see nothing suggesting that Apple can't match that performance yet again.

Other tech/gadget stocks in the News:

- Palm
(Story: Palm's Weird Treo Deal)

- eBay
(Story: EBay Apes Amazon?)

- Electronic Arts
(Story: EA/Take-Two M&A)


Questions? Comments?