Apples long runway
How much momentum can Apple gain from new Intel-based Macs and a potential iPhone? Apparently, a good bit.
Analyst Gene Munster of Minneapolis-based Piper Jaffray attended Apples Paris Expo to gauge European demand and what possible gains the company could see from new products. Among Munsters findings from interviews with 50 European Apple customers:
• Fifty-six percent of Apples most loyal European customers have yet to upgrade to an Intel-based Mac. "Several Apple customers that are waiting to upgrade to Intel Macs indicated that they are waiting for Adobes fully optimized Creative Suite before they will upgrade their hardware," said Munster in a research note.
• If Apple were to cook up an iPhone, 74 percent of customers said theyd have a strong interest if the product was priced at about $300.
• Apples most loyal European customers have owned 1.6 iPods over the last five years.
Whats MySpace worth?
OK, the century is young. But News Corp.s acquisition of MySpace last year for $580 million is the purchase of the century so far—especially if MySpace is worth anywhere near what RBC analyst Jordan Rohan thinks its worth.
"If YouTube and Facebook are worth [$1 billion] and Google [$120 billion], then MySpace should demonstrate value of $10 billion to $20 billion within a few years," Rohan said in a research note. Rohan, based in New York, acknowledges he is making an "audacious claim" that could be ripped to shreds.
Rohan said his claim is justified if one believes MySpace demonstrates:
• Raw, unprecedented user/usage growth;
• Massive international appeal;
• Scale enough to become an intellectual property distribution powerhouse; and
• A management team able to solve difficult technical, copyright and creative issues.
According to Rohan, the end game is monetizing MySpace. He said the site is sold out of video ad inventory and is building the infrastructure to roll out advertising over time. Meanwhile, MySpace is testing user tolerance for ads. Once the advertising plan is sorted out, MySpace will start making money off all those eyeballs.
Bottom line: Rohan said MySpace is comparable to Google in 2001. And we all know how that turned out.
Suns moment of truth
Sun Microsystems has momentum in the server market, and its relatively new CEO, Jonathan Schwartz, has delivered a pair of solid quarters. The big question: Whats next?
Analysts said the early
picture for Suns fiscal first quarter ending Sept. 30 is so-so. Merrill Lynch analyst Richard Farmer said, "Our checks on demand from July through mid-
September are mixed, with some contacts reporting strength and others modest weakness versus expectations. We believe the likely implication is that Sun is tracking roughly in line to slightly above estimates, which we consider modestly disappointing given the strong momentum."
While those comments might be worrisome, consider that its quite a coup that analysts are expecting more from Sun. In the last two years, Wall Street expected little from Sun, which had a string of poor quarters. For the record, Sun is expected to report a loss of 5 cents a share on revenue of $3.2 billion, according to Thomson Financial.
Farmer, based in New York, said in a research note that Sun may have rallied in the final days of the quarter, but his preliminary checks through mid-September showed the following:
• Low-end and midrange servers appear to be sustaining momentum.
• High-end servers and storage appear seasonally weak, though Farmer said strong gov-ern--ment demand could shore things up.
• East Coast financial services and telecommunications appear to have firmer demand than West Coast data centers.
—Compiled by Larry Dignan
By the Numbers
Rough valuation for each Facebook user if speculation that the social networking site is worth about $900 million to $1 billion is accurate.
Source: Susquehanna Financial Group