Apple Inc. (AAPL) - A week after the iPhone buzz
Apple Inc., (AAPL) stock has plummeted to its pre-iPhone announcement level. Trading at around $85 per share, this represents about a 12 percent dropped from its high of $96 per share. What a difference a week makes. Last week, everybody and their brothers were talking about the iPhone. The buzz is still there, but we have to admit, the thought of shelling out $500 for any gadget seems expensive. Perhaps the market has over-estimated the success of this product. When there’s so much hype built into the stock, it is prudent to be skeptical. Couple with negative sentiments regarding Steve Jobs involvement in the options scandal, the enthusiasm has somewhat diminished.
Our position remains the same for AAPL. We believed if AAPL were to drop close to $80 level, the return would outweigh the risk at that price. It is our hope the weakness in the market will help drive down AAPL a few more points so we can get in at a decent price.
There is no question AAPL will remain strong, just look at their iPod sales. People can’t seem to get enough of the product. Drop in at the Apple store at the mall; you’ll see it’s packed with young people. Our view is AAPL has a “consumer monopoly” in digital music and video. Ask anyone to name a MP3 player or their favorite music/movie download site, the answer is clearly AAPL. The iPod and iTunes brand has achieved recognition level similar to Coffee is to Starbucks (SBUX) and fast food is to McDonald’s (MCD).
Bottom line is AAPL will continue to dominate consumer electronics market. As a side note, let’s not forget Steve Jobs also sits on the Disney board. We see more partnership and marketing efforts with Disney this year.
**As always, we welcome your feedback and comments. However, please keep it respectable, otherwise we'll just end up junking it.**
