Speaking of Apple Computer, I just saw this on Briefing.com:
11:15 AAPL Apple Computer chatter (63.66 -1.29) -Update-We are hearing some chatter this morning about AAPL that we can't confirm, but found interesting nonetheless. The rumor is that DIS could buy a stake in AAPL's iTunes, which could then be a first step towards an iTunes IPO. This is a new one to us, and this type of AAPL/DIS rumor could be motivated by the fact that Steve Jobs will be on the DIS board following its acquisition of PIXR. Some of the initial feedback we heard on this was skeptical, so again, just passing this one along.
I'm skeptical too but I guess stranger things have happened. My guess is this rumor is being floated by desperate longs. :-)
Actually this might make sense because Apple may need to separate its music business because of the Beatles suit.
I'm with Mike on this one. The major issue with an iTunes IPO is that if iTunes was a separate company it would obviously be in its best interest to make iTunes work with other (non Apple) MP3 players. I can't imagine that Apple would allow that since one of the competitive advantages for the iPod is its exclusive integration with iTunes.
this would help bring an end the the constant lawsuits hanging over Apple from apple records. Itunes would now be separate from Apple and it would conform to the earlier Apple vs Apple settlement.
interesting. I'd still be playing Apple from the short side though. When you have a company with such a lofty valuation getting taken down like Apple is, it would likely take a lot more than something like this to buck the trend.
Myself, I harped about being short Apple and when the price moved in my favour I was too quick to take profit. Another lesson learned at the expense of my trading account!
IMHO, with the H&S pattern and neckline at ~70, the theoretical downside "target" for AAPL would be ~54, which, as of today, coincides with the 200d SMA.
However, with today's candle and volume on AAPL, I suspect that the institutions may try to hold it here, already down 22% from the top. If the stock is going to build an intermediate-term base from now on, we'll probably see a successful retest of today's low in the near future.
As for GOOG, I'd guessed that the decline might halt at the 333 area (top of the breakaway gap last Oct, and as of today, coincides with the 200d SMA also), which would represent a ~30% discount.
However, the action of the candles/volume from this week's Wedn. to Friday might suggest that, like AAPL, an intermediate-term low might already be put in. The low put in last Wedn. was successfully tested on Thur. and Friday, and we may yet see another test of this low if a base would develop.
I'll be watching these 2 stocks closely next week, since it might turn out that these "lows" were only caused by massive short covering before the weekend after the substantial declines.
Also, I heard that GOOG would be featured on Barron's front page this weekend (usually a death wish :-), so if this week's low would be successfully tested and held next week, then there'll probably be a good chance that it'd stick while the base is built.
ITMS's success places Apple in a huge quandry.
As the thetradingdigest points out above - as an independent entity ITMS would want to develop an alternative to Fairplay (and possibly iTunes itself) that could be licensed to other players (assuming that Apple retains the Fairplay license and keeps it exclusive to iTunes and iPods). This is not in Apples best interest.
The problem is that sales at ITMS are growing at a staggering exponential rate that threatens to outstrip Apple's ability to make up for the lost margins elsewhere. This I see as an even larger issue. We know that ITMS sales are marginally profitable at best - in the pennies per sale, and we know what Apple's overall margins are. We also know that the iPods themselves are in the lower to mid 20's - meaning that their growth cannot make up for the increase in music sales. Currently, only higher margin sales like software and accessories, PowerBooks and PowerMacs have the capability to make up for lost margins elsewhere. But their sales growth does not outpace ITMS sales.
To put this into a numbers perspective: the last 4 days sales (2-7-06 11am pst to 2-11-06 11am pst on ITMS ran just under 12 million at 11,571,000 - which is an annualized rate of well over 4 billion! And the first billion threshold is less than 3 weeks away if sales are sustained. Even if ITMS sales dropped dramatically - they are still a huge impact to overall revenues for AAPL this fiscal year that must be dealt with somehow ASAP - or the stock will get tattered come earnings release time due to the abrupt drop in margins.
I am curious how do others see this issue being addressed?
oops - error on the last post - didn't proof it as well as I should have - it should say "which is an annualized rate of well over 1 billion!" (the actual annualized rate is currently in excess of 1.1 billion songs sold)
As an aside - if one assumes that 60%+ of ITMS sales are done in North America - this increase in sales moves Apple from the 7th largest reseller of music to the 5th largest in North America. At 65¢ per unit going to the record companies - far in excess of what they realize from physical sales - this is one of their few bright spots in light of an overall decline in music sales