| | Analyst React to Apple's Boot Camp...
WSJ Online
April 5, 2006 4:22 p.m.
Most analysts expect Apple Computer to gain a bigger slice of the PC market after the company said it would make software available that would allow Microsoft's Windows operating system to run on its Macintosh computers. Some comments were edited. (Analyst disclosures follow.)
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The decision to enable Windows on Mac opens Apple up to a much wider audience, as Windows represents over 90% of the global PC installed base. Historically, Mac adoption rates have suffered from consumers' discomfort with the idea of having to give up Windows-only applications and from the fear of compatibility issues with the Windows environment. However, Boot Camp should significantly mitigate these concerns, and instead shift the focus to whether or not consumers are willing to pay for a Windows license on top of their Mac purchase.
-- Credit Suisse's Robert Semple, who rates Apple "overweight" with a $90 price target
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U.S. PC MARKET IN 2005
Company Share
Dell 33%
Hewlett-Packard 20%
Gateway 6%
Apple 4%
Source: IDC
We believe Apple will gain share in the PC market in 2006 and Boot Camp may serve to accelerate these market share gains. Our analysis shows that small market share gains for Macs would have a significant impact on our model. Specifically, we believe that a one-percentage-point increase in Mac market share could add 15% to our 2006 earnings-per-share estimates.
-- Piper Jaffray's Gene Munster, who has an "outperform" rating and $103 target
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We believe this move positions Apple to gain share with customers reluctant to purchase Macs due to concerns over interoperability with Windows systems. We continue to believe Apple is well-positioned to benefit from Mac share gains due to the "iPod Multiplier Effect." … Also, Boot Camp could help drive profitable software sales with a compelling Leopard upgrade.
-- UBS's Benjamin A. Reitzes, who has a "buy" rating and $95 target
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This gives Apple more control and marketing opportunities that should allow it to expand market share opportunities (especially in the consumer space). We continue to think near-term expectations are reasonable and even if Apple reports a slight miss relative to forecasts, new product momentum and second half seasonality trump any near-term volatility and we're buyers of the stock.
-- Morgan Stanley's Rebecca Runkle, who has an "overweight" rating and $90 target
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Our 'Look at the Core' positive investment thesis for Apple is based on our strong belief that Apple will accelerate market share gains as traditional PC users increasingly discover the inherent benefits of the Mac OS and Apple's proprietary digital lifestyle application stack. We believe … 'Boot Camp' will further dispel the myth that Apple is not compatible with the ubiquitous Windows platform.
-- ThinkEquity's Jonathan Hoopes, who has a "buy" rating and $90 target
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This will be a particular benefit for business applications where users need to run Windows for certain applications. … We expect Apple to preview its new Leopard operating system this summer, suggesting the product will be available for the Christmas selling seasons. As discussed previously, Microsoft's Vista push back creates opportunities for Apple to take share, especially as Apple debuts its new OS and now offers interoperability with Windows.
-- Deutsche Bank's Chris Whitmore, who has a "buy" rating and $100 target
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Apple is essentially removing the cost of "testing" the Mac platform for long-term Windows users. In addition, this move allows Apple to indirectly leverage Microsoft's significant application portfolio. While we believe Apple would clearly prefer that consumers adopt its hardware and software, Boot Camp provides a direct boost to Apple's capability to sell its highly profitable Mac systems into the massive PC installed base. In addition, with the Mac OS already installed, a Mac running Windows can be seen as an important Trojan horse for the Mac platform. In short, we believe this news, more than any news in recent memory, provides a critical boost to Apple's ability to gain share in the PC market.
-- J.P. Morgan's Bill Shope, who has on "overweight" rating
--Compiled by Worth Civils
Disclosures:
• Credit Suisse makes a market in the securities of Apple. The firm expects to receive or intends to seek investment banking related compensation from company within the next three months.
• Piper Jaffray makes a market in the securities of Apple.
• UBS makes a market in the securities of Apple. The firm said the equity analyst covering Apple, a member of his or her team, or one of their household members has a long common stock position in the company.
• Morgan Stanley beneficially owns 1% or more of a class of common equity securities of Apple. In the next three months, the firm expects to receive or intends to seek compensation for investment banking services from the company.
• ThinkEquity Partners makes a market in Apple.
• Deutsche Bank makes a market in securities issued by Apple. The firm owns one percent or more of any class of common equity securities of the company.
• J.P. Morgan makes a market in the stock of Apple. |
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