In the past two weeks, Apple Inc.'s (NASDAQ: AAPL) stock came down from a high of $127.61 to $117, and the stock settled back in and closed Friday at $120.75. As the shares were trading from the $120-127 level, the daily trading volume was huge, almost twice the normal 30 million shares traded per day. So what happened?
Apple opened its Worldwide Developers Conference 2007 this past Monday, June 15, for a week-long technical orgy featuring more than 100 very complex and technical sessions. I hear from the grapevine that the hedge funds were hoping for some sort of major announcement from Steve Jobs, Apple's CEO. Hedge funds were driving up the shares on the hopes that Jobs would announce increased expectations for the iPhone, or that the Mac is actually taking additional market share in this June 30 quarter. Hopes were dashed as Jobs gave a routine keynote speech with "nothing dramatic."
The hedge funds bailed out of the shares as the short-term trade possibilities were not materializing. The hedge funds did miss a very important announcement from Steve Jobs. He announced that available immediately is a Windows version for the Safari internet browser. In the first 48 hours, over 1 million were downloaded!
Apple is making the Windows version of the Safari browser available for one simple reason: Apple sees momentum building for the Mac computer. The new Mac has been a big seller, but with a Windows browser version available, the sales could accelerate. This could be the "pleasant" surprise for the next three or four quarters. I estimate that the Mac has a market share position of 5% of all new PC sales. Any increase in units not only drive a higher market share, but the extra revenues are not modeled in analysts forward estimates.This could be fun!
So, yes, the iPhone is going to capture an enormous amount of press and media hoopla, especially on the actual release date of June 29, but watch the Mac numbers specifically when Apple releases its June 30 results in mid-late July.
The stock took a $10 hit, a healthy, normal correction. The stock had zoomed up to the $127 level from the mid-$90s after Apple released its March 30 quarterly results in mid April. The $10 correction has actually stabilized the stock and fast money has left the building!
Apple has a lot of moving parts to its story. Stay tuned for more news and updates as this fascinating company keeps our attention.
Georges Yared is the CIO of Yared Investment Research.
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Reader Comments (Page 1 of 1)
6-17-2007 @ 11:23PM
Dave said...
There has been no shortage of speculation as to why Apple would choose to release a Windows version of their Safari browser. In my opinion, the reason that makes the most sense is so that Windows developers who write Web 2.0 / AJAX apps for the iPhone can test them out using the same underlying architecture (WebKit) that powers the iPhone's built-in browser, Safari, without having to have access to a Macintosh.
6-18-2007 @ 9:17AM
Warren said...
I believe they said as much during WWDC.