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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Don Hand who wrote (60093)	1/5/2007 10:23:43 AM
From: William F. Wager, Jr.	Read Replies (2) \| Respond to of 213182

DOW JONES Expectations High For An Apple Cellphone At Macworld Show DOW JONES NEWSWIRES January 5, 2007 7:32 a.m. By Mark Boslet Of DOW JONES NEWSWIRES (This article was originally published Thursday) The sprawling Consumer Electronics Show will kick off this weekend in Las Vegas, but Apple Computer Inc. (AAPL) may steal the show when the Macworld conference opens Tuesday in San Francisco. Analysts say they are hotly anticipating several key announcements from the computer maker, including the possibility of an iPod cellphone that plays music downloaded from Apple's iTunes online store, and a wide-screen iPod with touch-screen controls for video playback. The Cupertino, Calif., company also should provide more detail about the iTV product it unveiled in September and is expected to ship in the first quarter. The discussion is likely to offer insight into Apple's living room strategy for managing video, music and photos on the computer and television - and create a buzz that is likely to roil the CES crowds in Vegas, where video will be a central focus. Macworld also should allow Apple to show off features of the new Leopard version of its Mac OS X operating system for personal computers, including what some observers say could be virtualization features to more smoothly run programs designed for Microsoft Corp.'s (MSFT) Windows operating system. The Macworld show comes at an opportune time for the company. It should provide a welcome burst of good news after Apple's decision last week to take an $84 million charge related to the backdating of stock options, even as it cleared Chief Executive Steve Jobs of responsibility. Jobs' two-hour address scheduled for Tuesday morning - about twice as long as normal - will give him the chance to upstage his rival, Microsoft Chairman Bill Gates, who will address CES Sunday night. The timing of Jobs' address gives him the last word on Leopard after Gates discusses his long-delayed Vista version of Windows, which is scheduled for consumer launch later this month. Because of Apple's secretive nature, analysts say they have no direct knowledge of which products the company will unveil. However, expectations for the show are high, and the company's stock could suffer if Apple fails to unveil the much-anticipated cellphone. Apple closed Thursday at $85.66, up 2.2% on the day and nearly 71% from its July low. Many say they believe Apple has two models of a cellular phone ready to release in 2007 and that the products could be introduced at Macworld. One model is larger and includes a keyboard for sending email and scrolling the Web, says Rob Enderle, principal analyst at the Enderle Group of San Jose, Calif. The other is slimmer, comes without a keyboard and could ship first. Both will be able to download music and video from iTunes. "We hope to hear some more product details from the company" on the phones, says Ingrid Ebeling, an analyst at JMP Securities who doesn't own Apple stock and whose firm doesn't conduct banking business with the company. One key detail will be how Apple plans to market the phones. Some analysts expect the company to strike deals with wireless carriers, who will sell the phones in their stores nationwide. Others suggest Apple will enter an MVNO arrangement as a mobile virtual network operator and run its own network, much as Walt Disney Co. (DIS) has done. It is these arrangements, some suggest, that could sideline the product's introduction. "We believe (the phone) is real," says Richard Doherty, director at the research firm Envisioneering Group in Seaford, N.Y. "We don't think they have completed their negotiation with cellular carriers yet." A large-screen iPod has been the subject of rumors for months, and analysts say it is likely to be displayed at Macworld. The screen is expected to be substantially larger than the ones on today's iPods, and product features are anticipated to include touch-screen controls and wireless connections to a PC or network - a capability already in Microsoft's new Zune music player. Some analysts, such as Jonathan Hoopes of ThinkEquity Partners, say they will be eager to hear what Jobs says about his business model for television and movies. In September, Apple showed off a prototype of its iTV product for moving video, photos and music from the PC and the iPod to the television and stereo. No additional living room entertainment products are expected, but the question to ask is how Apple anticipates its living room strategy will lead to an increase in computer sales, says Hoopes, who doesn't own Apple shares and whose firm doesn't perform banking business for the company. The answer may involve Leopard. Doherty says Jobs may demonstrate how Leopard includes features to search for and manage video and audio content. Additional insight might lie in the address that Robert Iger, chief executive of Apple's content partner Disney, will give at CES on Monday afternoon. For the computer, Leopard is likely to include virtualization technology designed to let Macintosh machines more easily run Windows programs. Apple now relies on a more cumbersome program called Boot Camp, and virtualization could be a nice surprise, says Ebeling. The need for such a program is so evident that EMC Corp.'s (EMC) VMware unit released a beta test version of a virtualization product for the Macintosh late last month, in time for the show. Expectations for Macworld are already high on Wall Street, and Apple's stock could take a hit if the company fails to come out with a cellphone. Nevertheless, Jobs' discussion of video is likely to have a big impact well beyond the crowded show. "The shoe will drop in San Francisco, but the rumble is going to be heard in Las Vegas," Doherty says. -By Mark Boslet, Dow Jones Newswires; 650-496-1366; mark.boslet@dowjones.com