As broadband takes hold, Apple’s graphics strength should become increasingly obvious, according to a
by Dave Sterman, an equity research columnist.
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“Apple’s new products and strategies are setting the stage for a strong multi-year growth spurt,” said Sterman, director of Research of Chelsea Research and a financial commentator for various news outlets. “If you can visualize where the Internet is headed — interactive games, streaming media and other entertainment products that capitalize on broadband — then you can see how Apple’s digital media focus will start to pay off.”
“Myopic investors only look at the short-term,” the columnist said. And Apple’s short-term prospects, like most other tech companies, are flat right now. But focusing on the iMac — or the next few quarters — is missing the bigger picture, Sterman opines.
“New digital products, a new retail strategy, and a strong management team means this story has legs,” he writes. “Apple is positioned for growth in the coming years, even as the broader tech landscape continues to contract. The recently-released iPod gives a glimpse of what’s to come.”
Technology research firm IDC thinks the iPod could capture up to 20 percent of the MP3 portable music player market in 2003. If they’re right, that would translate into about US$1 billion in additional sales and $0.35 more in EPS for Apple in 2003, according to Needham & Co.’s Charles Wolf. And UBS Warburg’s Don Young adds that iPod’s gross margins are roughly five percent better than PCs.
“Now extrapolate that one product into a broader vision of a line of higher-margin digital products,” said Sterman. “Later this year, Apple is expected to capitalize on the iPod momentum by steadily releasing a new stream of products.”
He doesn’t mention what those products are. And, naturally, Apple isn’t talking. But Sterman is keen on Apple’s retail stores and their potential to lure Wintel users.