To all, this link has been posted on the yahoo and go.com boards in reference to DIS/Apple, INTERESTING!
macweek.zdnet.com
Friday, July 16, 1999
RFI Report: Mickey Mac vs. bears
By Robert Morgan
I don't want to start an analyst death match (even though I know who would win), but the Apple perma-bear analyst at CIBC Oppenheimer has maintained an "underperform" (read "sell") recommendation and rating on Apple since it was trading under 19.
If the clients of CIBC Oppenheimer had religiously followed the analyst's advice, they would have missed out on 300 percent to 400 percent gains on Apple while suffering continuous and repeated losses by selling Apple short and/or writing/buying put options on Apple since at least July 1997. That's the historical record, one that the financial and general media don't bother to check when they give any attention whatsoever to his man-bites-dog commentaries and downgrades on Apple. For what it's worth, the CIBC Oppenheimer analyst -- and the firm that supports his ratings -- have been 100 percent wrong on Apple for two years.
Several months back, Recon For Investors (RFI) commented on the mysterious disappearance of CIBC Oppenheimer's bearish "underperform" rating on Apple only to see it raise its head again after Apple posted its 3Q earnings. The firm's justification: purported concerns over slowing sales. If I wanted to blow away any concerns about Apple's prospects for its 4Q and 1Q, I would make public the lengthy analysis RFI did on Apple's 3Q earnings. Suffice it to say that "concerns over slowing sales" are sheer twaddle. (It's like when I took on Mr. Alsop over the fact that there would be no "consumer version" of Mac OS X, nee Rhapsody, about two years ago. Last I checked, OS X Server is shipping and Mac OS X Consumer is on its way.)
As far as the real accuracy of CIBC Oppenheimer's stance vis-a-vis Apple: I won't ask you to take it on faith. Pick and choose whichever market source you want. Personally, RFI prefers Apple Recon's public readership to use Big Charts.com, but you can select your own source. Do me a personal favor and select a chart that reflects Apple's performance from July '97 to date. That's about the time RFI reversed its "trading sell" to a "trading buy" and CIBC Oppenheimer's analyst offered his first iteration of what is known in brokerese as "sell" recommendations. See what Apple has done since then and then compare it to that analyst's continued bearish recommendations. Can't windshield-wipe a chart, can you?
I wish the financial and general media would take a look at this kind of history before giving credence to an analyst's man-bites-dog-type comments and recommendations. Without the benefit of the history-obviating Windshield-Wiper Effect, the media and The Street would have given that report as much attention as they would to someone who stated that Disney was going to buy Apple and Pixar and have Steve Jobs replace Michael Eisner as chairman.
Yet, Apple's share price was affected the day before expiry because of bearish comments by an analyst who has been 100 percent wrong on Apple for the past two years. Go figure.
Keys to the magic kingdom
But what the dickens is that analyst going to tell his firm's clients if Apple and Disney do in fact unveil Myapple.com during Macworld Expo next week?
That it's all a mistake and that the prospect of Apple teaming with Disney to create an Internet portal is doomed to failure? That the probable rallies in both stocks represents a huge error by overly exuberant investors? That in fact any rally in Apple is yet another opportunity to short Apple? Whatever the potential explanation, it's fine by me. We'll be more than happy to take the money from those CIBC Oppenheimer clients who shorted Apple and wrote, bought or put positions on the basis of that "downgrade." Money is money. And for what it's worth, Apple is expecting sequential and year-over-year growth in its current quarter and is comfortable with the First Call Corp. consensus estimate of 76 cents earnings per share. (God, I wish I could release that analysis report!) Even without doing so, Apple lowered the guidance; the fact of that matter is they'll be reducing inventories prior to having all four product lines available in quantity in its December quarter (which begins Oct. 1).
If Apple unveils Myapple.com alongside Disney during Macworld Expo, the announcement will have some ancillary effects. Specifically, it will negate the abuse RFI, Apple Recon and even myself have suffered since we first broke that news -- our vision of "Mickey Macs" will prove to have been well ahead of the power curve. (It's why we put the "Spinning Mickey Mouse Mac" back up on Apple Recon's public site in our first update to the public site since June 22. And if the site is partly powered by Oracle solutions? Even more appropriate!)
I'm not saying this announcement is a "lock," because we haven't been able to nail it down as much as we'd like. We're treating it as a rumor, and an unconfirmed one at that. But if it does come to pass, how sweet it will be.
Furthermore, it appears that Myapple.com isn't the only surprise in store for Expo. I promised not to spoil any surprises, and I'll keep my word. Nevertheless, our friends on The Street are welcome to use my list of stock rundowns as a kind of check list before, during and after Expo. Sooner or later they'll probably realize that I was waving as big a red flag as Apple CFO Fred Anderson brandished during this week's conference call about the company's third-quarter results. (Have I mentioned how much I wish I could authorize the release of that analysis report? Even now I'm pushing the envelope to the straining point.)
Dig, dig, dig
In fact, that's the reason Apple Recon's public site hasn't been updated since June 22 and why it's only being updated as we head into Expo week. It's not just that we've been totally immersed in the care and feeding of RFI's subscribers and my commitments to MacWEEK. I've also been placed in an extremely difficult position.
There's been precious little "private" RFI and Apple Recon content that I could comfortably authorize for general release. In my MacWEEK columns I've skirted as close as possible to the edge in the interest of providing both MacWEEK's and Apple Recon's readers with information. During that long silence, however, public release of some of this information on Apple Recon would have crossed that delicate line of etiquette between what's tolerable to discuss in private and what's intolerable to discuss in public.
The best of friends
But back to the relationship between Myapple.com and Disney. A while back RFI posited what would happen to AOL if Disney decided to pull its content: AOL's share price would take a bungee jump with the loss of a major content provider and draw to its members.
Well, the reverse will be true for Myapple.com if Disney is a partner or major presence there. Same goes for some of the other rumored content providers that I good-naturedly call the "Apple (Internet) Broadcast Network." Disney knows full well that a lot of Mac users -- especially all those new iMac owners -- are either families with children or schools (which for some strange reason have an disproportionate number of children in their demographics).
If you were Disney, and you knew that Apple was going to launch an ISP-type service specifically aimed at Mac users that are also a core part of Disney's target demographics and core markets, wouldn't you be all over it like white on rice? You bet your Aunt Fanny you would be -- especially if the content of said service would also feature "Realtime Streaming Protocol Channels" that would support interactivity. In a nutshell, that's why Disney isn't the only content company interested in being part of Myapple.com.
Just recently, RFI ran a commentary on the fact that toddlers (actually, one toddler in particular) had been overheard repeating the phrase "W-W-W dot Disney dot com" like a mantra while sitting at the computer. We called it "Music to Michael Eisner's ears." If all the toddler had to do was point and click on a Disney icon on Myapple.com, she'd not get all that Disney.com content; furthermore, if it were presented in QT4, she could get all of the Disney programming with hard, verifiable ratings better than the Nielsen's as well as the interactivity that the set-top box would offer. If users also entered their "demographics," it would be an advertiser's or marketer's dream come true. (Go all the way back to 1997, '95 and even '93 for RFI scenarios along those lines.)
Listen: Name a better "partner" for appealing to and reaching families with children than Mac users. As far as schoolkids are concerned, name a better partner for "mind on"-type content. Hard to meet or beat on both ends of the deal, no?
A whole new world
So let's assume that the rumors are true and Apple launches Myapple.com at Expo and that Disney will climb aboard as a key partner or player. What will that do to the share prices of Apple and Disney? And what in the heck will that CIBC Oppenheimer analyst say to his firm's clients? Especially since this rumored announcement is only one of the anticipated MWNY announcements and surprises? Oh, to be a fly on the wall or in on that call to clients.
Bottom line? I gave my word about a lot of things, but none of those promises included the rumored Disney and Myapple.com developments. And lest anyone gets angry at me for this instance of rumor-mongering, I was cajoled and even coerced into it. (My opportunity to introduce Steve Jobs at the keynote hinged on my writing this column!)
Anyway, my restraint from May to late June more than makes up for it. If we fired off everything we've been discussing in private, John Murphy would be scratching his head over why Apple's stock went into uncharted territory a lot sooner than his technical analysis predicted (and with the heavy buy momentum behind it as well).
And while I'll be authorizing releases onto the public site before Macworld Expo kicks off, it will have to be selective. I made a promise not to spoil any of the surprises in store for the show.
Finally, if this column seems to take a whimsical approach to the dirt it dishes, please be advised that it was written after working more than 24 hours straight while relying on what I call "CAN Do." Caffeine, Adrenaline and Nicotine is the "CAN." And as long as I have the "CAN," I "CAN" do what's needed. Just renew the Southern Pecan Continuous Drip with cream and no sugar and keep it filled. I'll sleep later!
See you at Macworld Expo! |
