Analysts say the introduction of Mac OS X has helped “put a floor” under Apple stock, according to a CNBC.com
article. Of course, as they admit, a US$4 billion cash stockpile doesn’t hurt either.
“OS X will certainly be a positive for Apple later this year,” James Keller, a research analyst at the value-oriented $5.6 billion dollar Mutual Series Fund, which has been a recent buyer of Apple shares, told CNBC. Though Apple’s stock dived after the fourth quarter of 2001 and though “investors got out of the stock in a hurry, I assure you that Apple is not only a viable franchise, it is vibrant and exciting, and one of the only innovative companies in the personal computer market.”
Apple’s loyal customer base and ample cash reserves were the key ingredients that made Keller’s Mutual Series Fund one of the largest institutional buyers of Apple’s stock in recent months, according to the article. The fund had purchased 3.8 million shares of Apple’s stock by the end of the last quarter at prices in the mid-to-high teens.
Keller, who researched the purchase for his fund, told CNBC he was particularly attracted by Apple’s book value, which is estimated at about $12 a share, thanks largely to the firm’s sizeable bankroll. Keller says the stock became particularly attractive after many other institutional players bolted out the door.
“Plus, the analyst said the cash reserves are a “nice form of protection. At these prices and taking into consideration the book value we feel like we are getting the company essentially for free,” Keller said. Meanwhile, OS X also has lots of financial experts pumped up.
“I think the new OS is a very significant development,” Tim Bajarin, an industry analyst at Creative Strategies, told CNBC. “The Mac faithful will be interested in its powerful multitasking, and multithreading features, which help prevent crashing.”
Though OS X is still missing some vital features — such as a DVD Player and the ability to burn CD-RWs — that doesn’t concern Bajarin, who notes that Apple has promised to address the issues. Rob Enderle, vice president of the Giga Information Group, told CNBC that the introduction of the new OS is an important milestone, but doesn’t think it will attract many new users to the Mac platform.
“On the list of things needed for Apple’s survival [OS X] was near the top,” he told CNBC. “But it is more a barrier to competitive migration away from the Apple platform rather than something that will grow Apple back into the mainstream.”
Enderle says Apple has two main problems it must overcome in order for the firm to once again become a credible threat rather than just a niche player. He said the company must adapt its software so that it more seamlessly runs all Windows programs, such as Lotus Notes, and that Apple should also consider jettisoning the unique Motorola microprocessor it uses in favor of the microprocessors used by Windows machines, which are typically made by either Intel or Advanced Micro Devices.
But Keller disagrees.
“Every time the company runs into problems the critics say they won’t be able to make it unless they adopt the Wintel [Windows and Intel] platform,” he said. “But Apple has a very loyal customer base and we are comfortable with the opportunity within that base. Adding market share would be a bonus, but it is not why we bought the stock.”
In addition to holding its share of the market, Keller said he is also banking on more positive surprises from Apple CEO Steve Jobs. For instance, he expects to see Apple introduce a new personal digital assistant (PDA) or similar device in the near future.
“Apple invented the category,” he told CNBC. “I don’t know if it will be in a year, or 18 months, but eventually we will see a new PDA from Apple. And when that happens, I fully expect that the most exciting personal computer company on the planet will have the most exciting PDA on the planet.”