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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (43412)	6/28/2006 5:03:08 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68496

HERB GREENBERG Behind one analyst's 'sell' on Apple Is it on its way to becoming a Microsoft-like monopoly? By Herb Greenberg, MarketWatch Last Update: 4:01 AM ET Jun 28, 2006 SAN DIEGO (MarketWatch) -- In response to a recent column regarding financial disclosure issues at Apple, one reader posted a comment on my MarketWatch blog that went something like this: "The iPod has changed the music world forever. It's only the beginning of the many ways the iPod will be used in the multi-media world. It's just getting started. Steve is a genius. Have faith." My response: "The iPod's marketing has changed the music world; MP3 players, as a group, have been the real catalysts. The iPod isn't without competition, including the likes of Sandisk (SNDKSanDisk Corporation News , chart, profile, more Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: SNDK ) and Creative Technology (CREAFcreative technology ltd ord News , chart, profile, more Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: CREAF ) ." Ah, competition: That's just one reason Bob Renck of RL Renck has had Apple stock rated as "sell" since January. In my column earlier this week, I noted that Renck doesn't believe Apple (AAPLApple Computer, Inc. News , chart, profile, more Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: AAPL ) is properly breaking out the operating results of its segments. I didn't, however, explain why he has been one of the few (if not only) vocal bears on Apple. Among his other reasons: Falling margins: "The decline in operating margin year-over-year last quarter is not a good sign given the fact that Apple benefited from declining NAND flash prices," he said. "Gartner is out in the last day or two with a forecast of a turn in demand and price. In short in the last two years Apple had the wind at its back. With a headwind leverage can work both ways." Concerns over the timing of Intel-based Macs: "A successful transition to the new Intel base Macs may occur, but timing is uncertain, This is now being factored in as a given with little hard evidence. In short it may not happen quickly." A slowdown in iPod sales estimates: In the last two weeks, Renck says, "It appears that iPod June quarter demand estimates are being revised downward by a large amount with no apparent reason other than lack of demand. JPMorgan also reduced September quarter demand by about two million units... Just as there was little basis except following the trend for increasing estimates, the trend is down." While one reason for the estimate-slicing might be tied to the lack of a new iPod, which could come any day, it could also be tied to competition. A quarter ago the company said its market share had ballooned to 78%. However, according to Majestic Research, the "consumer interest" market share of Apple through mid-June has been sliding. Consumer interest, the research firm says, reflects 20 million consumers clicking on comparative shopping engines. According to Majestic research chief, Tony Berkman, this has been a great predictor of Apple sales for the past five quarters. As of mid-June, he says, Apple's "consumer interest' share has fallen to 34% from 41% in April. Meanwhile, share for Creative Technology, Sandisk and I-River has moved higher. I'll add something else - let's play monopoly: With the "closed system" nature of iTunes, which makes it hard for current Apple customers to switch to competing products, is Apple on its way to becoming the very monopoly for which it assailed Microsoft? I asked a spokesman for comments Apple may have had on this subject; I'm sure I'm not the first to ask the question. This is currently a hot topic in Europe. If he gets back to me, I'll pass it along his comments. Apple is expected to report earnings July 19. And this note: In my earlier column on disclosure, I didn't point out the most obvious comparable as a company that discloses operating results of its various businesses: Hewlett Packard (HPQHewlett-Packard Co. News , chart, profile, more Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: HPQ ) . Herb Greenberg is senior columnist for MarketWatch and contributor to CNBC television based in San Diego. He does not own stocks (except for shares of his employer), and he does not sell individual stocks short or invest in hedge funds.