Apple (NASDAQ: AAPL) traded at over $200 just before the first of the year. On a good day it now trades at $128. 24/7 Wall St. recently ran an analysis of why Apple’s stock would not rise this quarter. There are some things which Apple could almost certainly do to improve its position, but Jobs & Co.are not known for looking outside the company for advice. And, that is part of the problem. Apple is very secretive about how it does business. Some of the critical changes the company could make short-term have to do with improving access to information about the company.
Wall St. analysts currently have a median price target on Apple of $200. Of the 25 brokerages that cover the company, First Call shows that one analyst thinks the share will move up to $250. That shows there is a huge dislocation between how investment experts think the stock should be and where it trades now.
The first thing that Apple could do to get investors back on board is to tell them that the economy at large is not crippling their business. This is the first and foremost reason for the shares falling as far as they have. Most analysts think Apple will beat street estimates on Mac sales. American Technology Research sees 2.1 million Macs sold in this quarter, slightly above the consensus of about 2 million, according to Barron’s.
Apple does not release monthly sales figures for its major products, the iPhone, iPod, and Mac. The company should. Investors are forced to rely on experts to interpret data from resellers and suppliers to try to get at numbers which Apple could readily release. If several research firms are right and Mac sales are well ahead of expectations a release of January Mac sales would go a long way to calm shareholder fears.
The next thing the company needs to do is set the date for a release of the 3G version of the iPhone. Citigroup’s research analyst covering Apple says to look for that announcement in the next two quarters. But, Apple almost certainly already knows the timetable. If the iPhone has an Achilles heel it is that it runs on a slow data network which handicaps users. A 3G version which would run on AT&T’s (T) high-speed network would almost certainly lift iPhone sales and get people who currently own the handset to upgrade.
Apple has not said anything about the impact of upgrading memory in the high end versions of the iPhone and iPod. The handset now has a 16 GB model which retails for $499 and a version of the iPod with 32 GB which sells for the same price. The price of these models is $100 above the standard versions of the products but it is clearly not costing Apple that much in component costs. Some data on how the new models are selling should show improved profit margins on both products.
That opens the issue of Apple’s component costs. The company has not made any public statement about how much more it is making on its products because of global reductions in the price of displays and memory chips. Research firm Pacific Crest says the drops in costs will add $10 in gross margin to each Mac. That is against over two million units a quarter. Apple has those numbers. It would mean a lot to investors if they would let their CFO talk about them,
Another badly kept secret about which Apple gives little detail is that figures show iPhone customers download more data than the owners of any other handset. According to Fortune, Google (GOOG) has released numbers which show it is seeing 50 more searchs from Apple iPhones than from any other mobile handset. If that is true this could be a huge benefit to Apple. An iPhone customers would have to buy a very high end data plan from their carrier to do this kind of web surfing.. Apple gets a cut of this revenue. The bigger the customer contract, the better off Apple is. With close to five million iPhones in circulation, that is a lot of money. Apple never comments about it.
CNBC recently reported that Citigroup says “Apple will beat the Street’s expectations for the March quarter by a dime or more even though revenue will come in line. In other words, not only is Apple doing just fine, it’s coming up with a way to be more profitable. It’s not just fancy flash at this company, it’s about running a tight business that builds on the success it enjoys in the marketplace.”
Any such comments about improving profitability coming from Apple? The flow of news out of the company is turned completely off That is the biggest problem the Apple shareholders face. Information from the company compared to speculation from Wall St. is worth $70 a share. So there..
The company could make one more gesture, It could kill its only really failed product line, Apple TV. That would show the market that the company is willing to admit its mistakes
Douglas A. McIntyre.