This article is cotton candy devoid of any meanigful facts but merely positing "what if" speculations. There is not a stock in the world for which endless scenarios could be laid out to discount current strong performance. I expect a lot more from a CNN sanctioned "news" piece than this.

Apple can sell iPods at higher prices than the competition, because most people want iPods. It's still a growing market, and some people are already replacing earlier versions, or buying extra iPods for the car or the living room. Apple will soon come out with a full screen video iPod, like the iPhone, but with a large disk of 100-150 Gb. These new iPods will have a higher price than the current versions. And that's how Apple stays profitable. I don't see lower margins in the coming years. Margins on the iPhone are even bigger, up to 50%, said isuppli.com today.

There are no serious competitors to the ipod. Im tired of hearing the same old BS. The internet reviewer have made this stock fall. Thats good for me as Im a long buyer since 1992. Apple will release a ipod video, tablet, mac upgrades and Leopard soon. This is a growing company with lots of excitement. Take your investment money and go buy a Mac, you'll be back buying the stock like me....lkmd

WHAT A TIMELY ARTICLE !
ANY PREDICTIONS FOR LAST MONTH!

Um, has anyone actually bought a Zune?

OK, that's snotty, but this statement that "serious competitors to the iPod are just starting up" is really ridiculous. "Serious comptetitors" to the iPod have been starting up for five years -- and falling by the wayside.

Apple certainly shouldn't take its lead for granted, but no one has come up with a whole package that is even close to the iPod plus iTunes -- and the iPhone looks like a another huge leap ahead of the competition.

Stating that the Zune is even remotely close to being a competitor shows the lack of real research going into this article.

The Mac's growth is up YoY and pricing is up 9% - now, show me ONE PC maker with pricing power like that?

Try listening to music on your Toughbook while jogging - that's how well your comparisons go.

Competitors? Where? The Zune? Hardly. If Apple hits its target of 1% market share with the iphone profitability will be easily maintained.

You guys really want to bring this stock down, eh?

No matter how much good AAPL does, this blogger manages to find faults. What exactly is your agenda?

The Zune has <2% of the mp3 player market share, so I'd hardly call them a tough competitor to the iPod juggernaut. And umm, that Toughbook is from Panasonic, not Toshiba. How much actual research went into this article anyway??

If you're going to compare the Toughbook laptop to the iPod mp3 player, then why not ask why you can't "pinch" an image on the Toughbook to zoom in on a photo like you can the iPhone? Apple's new iPhone features might drive people away from these laptops, if we're going to make absurd comparisons. I bet this reporter doesn't even understand the difference between a laptop and anything that Apple offers.

Profitability?

iPod, Beatles, iPhone, Leopard, BaseCamp, Apple Stores, TBA Video iPod (iPhone sans the phone), TBA Mac Tablet (Video iPod w/ media ports, 6" multitouch screen), TBA Google partnership, Apple TV, TBA YouTube/TV peer-to-peer network, and TBA FairPlay DRM licensing.

That about sums it up. Apple will be trading at $150 by Jan 09.

These idiot analyst are always wrong about Apple.
My advice is get out of our office, go to an Apple store.
Sit back in the corner and watch the traffic. While you're there, use a mac for a few minutes. You might start to get it. MIght help make your next forecast a wee bit more accurate.

OK, you posted worldwide results which clearly show that Apple was not head and shoulders above all the rest but they were on very except for Acer.

now look at US only. Apple is at 30% growth for the 4th quater and Dell is DOWN 17% and HP is only at 16% and Acer is no where to be seen. Also Gateway is DOWN 1.1%. Only Toshiba did well at 22.3.

So perhaps Appple does fair well worldwide but back in the USA, they are on top when others have negative growth so that is meaningful!

The Zune may not be a threat today but the entrance of Microsoft into the market should at least raise a few flags. I don't mean to claim Zune will take down the iPod this year or even this decade. What it is going to do however is force apple to continue to innovate and is also going to compress their margin. And remember, it's Microsoft; wait for Zune 3.0

This is a poorly researched and written article that should not be on the same page with market news.

Apple has never been one to lower prices on products. It's part of the reason they lost the PC battle in the 80s. Maybe Apple will learn from it's mistakes?

This article, as has been stated in prior comments, is just fluff which seems to say nothing of any substance. Would you run an article stating that Microsoft was in trouble because the MAC OS Tiger coming out in May was just as advanced as Vista? Of course not! Perhaps jounalistic "piling on" is justified when there are genuine concerns but, in this case, it is just worthless space filler. Any partially knowledgeable reader is likely to conclude that you do not have a clue!

Haha, this guy is absolutely clueless. Perhaps get another job or stay away from tech articles in the future.

The thing about Apple is they make fully integrated products that work seamlessly between the hardware and software, and they get it right the first time. The iPhone is not even available yet and it has made the Zune obsolete with the features it has built into it. Pier to pier sharing, blah blah blah... Blue tooth, blah blah blah... Have any of you tried just emailing an iTunes track to a friend? The iPhone will be a big hit and what ever derivitive products Apple makes from these technologies. However, the self proclaimed experts will manage to talke the stock down over the next month or so by wringing their hands about canabalized iPod sales, stock option horrors, and what ever else they can find to worry about. I will by back again closer to the end of the quarter.

Down talk Apple and the short sellers have a bonanza...create a story,forget the cash on hand,let's beat up on a great innovator the usual past time of persons with little research skills, just bla, bla, bla...

All the comments on the article have even less substance than the article itself. Please remove both.

The comments on this article are poorly researched and speculative examples of rampant fanboyism.

Some of you may be content to sell your soul to Apple and spend eternity ironing Steve Jobs' turtlenecks, but I am not.

boo hoo, aapl sold off. The market is right and evrybody else (it seems) responding is wrong. sales are slowing and the phone wont be out for months, plus who's buying a 6-700 phone? maybe you smart rich folk....keep buying aapl, dont worry what dumb old wall street has to say, I'm sure you'll do fine.

This article was horrendously prepared, in my mind. It does not have much basis in fact, and where it does, the facts are skewed for the author's purposes. AAPL fell 6% one day, that doesn't mean we need to all sell off immediately because some new competitors are in the mix; they have been for years.

Gross profit up to 31.2% while lowering the price of every iPod across the board! Apple has always had a high profit margin. Why don't we compare all the other companies you included in the article. They can't even com close to Apple's margin numbers. Do they not have to contend with the same component prices?? If anything they will have to lower prices to compete, thus lowering their margin. Oh, I forgot to mention as did everyone else...the street wanted 14-16 million ipods, Apple gave them 21.5!!!

In my endless search for investment help I've found that any piece that starts with the word "maybe" immediately raises the eyebrows. No thanks.

Any forecast about Apple has to include the fact that the company will soon release a powerful new OS. There are thousands of customers like me out there who have been not bought a Mac since last fall simply because they're waiting to take the leap with Leopard. Look for desktop and laptop sales to jump significantly this spring.

As computer sales worldwide slow, all companies need to look to other products for growth. Oh, wait...Apple started down that path 5 YEARS AGO! They even droped Computer from the name as a signal of where they are headed. You think the iPhone is the only thing they have been working on for 2 1/2 years. I'll bet the other devices will make your head spin. On the Zune...when it came out, most comments were not...How Cool!...it was wait for vers. 3.0, well, can you imagine the iPhone 3.0???

Your update to this article thanks Rob for pointing out that Toughbook is Panasonic, not Toshiba, "as I had originally stated". My question: Does the use of "I" above mean that the actual staff of The Browser consists of just one person, or does its use represent collective clonal consciousness?

2 days ago Wall Street said...Yea! for the iPhone...up 7%. What does the Street know??? Oil up...bad. Now, oil down...bad. Great economic data...bad. My head just felll off!

rossg "sales are slowing"? Where did you get that? Off a Microsoft blog??

A response to Larry: It's true that Browser posts tend to go back and forth between first and second person, i.e., I and we. Apologies if that is confusing. Currently, there is a five-person rotation, one per weekday, of Fortune writers who contribute to The Browser; Telis Demos, who wrote the Apple item, is Thursday's contributor. Occasionally I pipe in, too, as the Browser's sometime editor, as do other Fortune tech writers.

Silly article. If the iPhone canibalised iPod sales, all Apple would be doing is swapping a higher margin product for a lower margin product - and boosting its share of the market. The high margins aid Apple if component prices increase - besides most of the risk there is shouldered by the manufacturer - Apple is a design company, not a manufacturer.

A question to Jim Ledbetter: Do any of the tech writers own any tech devises? Doesn't seem like they do.

Zune is a competitor contrary to popular belief. No you may not want to listen to it while jogging but who cares. Joggers are a small population of the buyers. More people who just sit around, chill and listen to music don't really mind a larger player. Plus the Zune is harder to misplace.

"The many anaylsts who contribute to CNNMoney's tech roundup are puzzled by the market's pessimism". I can't imagine why! Every minute you turn on CNBC, all you hear is Becky Quick, Mark Haines, Joe Kernen, and especially Bob Pisani all saying that the market is overpriced and due for a correction and how nervous they all feel! That's not news. That's an opinion! The news is "The DOW rose 5 points". The DOW fell 10 points. They are going totally negative about as much as they went positive during the huge runup in 1999! And it impacts public opinion. Are the analysts that want cheap shares taking them all out to dinner at posh restaurants?

First for the apple fans looking to validate their worship: stop reading now; there is nothing i can write that you'll like. Anyone still reading that is open to rational arguments, however, consider this: first, there is the CNN video that has been out a few days talking about how there are many phones in Japan that do much more than the Apple Cellphone(won't call it iPhone until i read from a reputable source that Apple has reached a compromise on the trademark), and raises the question of why Apple did not incorporate 3G wireless capability into its phone. Also, people may not think the Zune is a good competitor for the iPod, but what about the many other music players on the market? The fact of the matter is, there is no way apple can continue to maintain their pricing trends without surrendering market share to cheaper alternatives(there may not be a single, individual competitor, but if each little one gets even 0.1% it can add up quickly). Given that their high profit is also dependent on the fact that they are buying components cheap and selling the items for a premium, it's no wonder investors are nervous- that's basically hoping that nothing affects component/construction price(be it an active hurricane season(shipping), rise in raw material costs, w/e), and hoping nothing develops that is competitive with the iPod. As I'm often reminded by my dad, Hope is not a plan. I'm not saying their profit might go away if production price goes up, or competition increases, just that it'd go down.
Responses to other comments: Phil, Seattle WA: first, it's peer to peer. And about emailing tracks to a friend... is that legal? Second, the zune is actually... affordable for the target market(teens/college). While the apple cellphone has many features(which NO ONE HERE HAS USED, BECAUSE IT'S NOT AVAILABLE YET-please at least postpone the worship until its actually been used by CONSUMERS), I cannot justify spending 500-600 dollars on a cellphone, nevermind service costs.
Peter, Charlottesville VA: wth do the beatles have to do with it? second, half of your items are TBA, aka Irrelevant.
Hugo van der Vlist, the Netherlands: Yes, they can sell at higher prices... but only to a point. No matter what name is on the product, if it's going to be significantly more expensive than an equivalent item, I'll buy the cheaper equivalent (this may not be applicable now, but should the prices continue rising i can see it happening -example,from Frys electronics I bought an mp3 player, and a 1G SD card for a total of $30 a year ago...yeah, it's not huge, but there are other options that are larger)(for people reading: don't go on about how nothing can match the iPod. I thought i told all the Apple worshippers to stop reading already). Also, why in the world would you buy second iPods for the car or living room??? I thought the point of an mp3 player was its portability?

Sounds a lot like more Apple bashing as we've been hearing over the years to me.

If the media puts out stories biased like this, of course the ever skidish, typical investor is going to panic and sell. This is why the stock dropped even though the company released positive numbers.

Additionally, this down day could have simply been profit taking on a very quick run-up in the stock price. It by no means indicates an end to the up trend for Apple's stock.

I found interesting all the Apple numbers are from its US sales. What about its OUS numbers? As far as I know, Apple is NoBody in China. Mac, iPod or the new iPhone has attracted minimum interest there. Does that say something? Don't foget China is the largest cell phone market in the world now.

I have sold most of my Apple stock. There seems to be a strong need by a lot of people out here to knock them down without anything close to reality. I guess too many folks are short and desperate.

Apple may only go on the downside if and when Steve Jobs leaving the company or dead.

apple just happened to be in a unique position of coming first to the market with an actual good mp3 player. it brought alot of attention to apple, but since then. what have they really done? the ipod's functionality is very easy to use but what has ipod created that was actually breakthrough? secondly the cell phone market is totally different from ipods. there's such things as contracts and they're also licensed with cingular only. i have no doubt that people are gonna go out and buy it. but they basically shut out half the market with a gsm only phone. and again there is nothing breakthrough about this product besides it's looks. and yes i do own an ipod.

Your assesement of Apple is partly in accurate. The brand has always had component cost challenges however the brands growth in devices is stunning. It has continued to defend poor quality intruders very succesfully. the biggest issue is that the stock is over hyped by users in love with the devices and thus the stock.

Okay. I find the Zune player much more attractive than the ipod. But I am stuck with a mac until further notice, and they're not cross-compatible, so I just do without an MP3 player.

I wish Microsoft would just buy Apple out already and put a stop to this stinking brand name war.

money.com quotes...In holiday 2005 iPod sales grew 207 percent (to 14,043,000), in holiday 2004 they grew 525 percent (to 4,580,000), and in holiday 2003 they grew 235 percent (to 733,000). Dropping to 50 percent is a dramatic slowdown.

Fanboyism? Hardly. I was and am still am an IBM brat. When IBM sold out to China, I stopped buying. Zune as a competitor to the iPod, nope. And if you think that Apple was the first and only MP3 player seller, try Dell and Gateway. They make a majority of their monies selling computers. Steve Jobs has done a good job of mixing computers, consumer devices and the largest song and video store on the Internet into one package. Yes, Apple has not always done it right, but the Steves have moved in their own direction. BTW, I like the phrase: 114,000 viruses, not on a Mac. As to the vulnerability of Apple, their competition had the chance a long time ago and missed it. Appl the stock will suffer a small setback as folks who were hoping on a 50% growth pattern move away, but the stock will keep on growing, abet at a slower pace. And this was written on a Mac, I will not return to PC land anytime soon.

The press hates AAPL because AAPL won't play in their Sandbox. The press likes to control all things. Sorry AAPL will never play in your world.

Rabble Rabble Rabble... Yet a small voice heard above the chorus of fanboys and antifanboys whispers about the solid rock that is Apple's financial base. Like it or not, Apple has cash and has shown it knows how to innovate. Success can only be thwarted by scandal and if Apple has learned its lesson recently, chances are, scandals will be avoided in the future.

sorry, but this article is one of the latest bashing apple... the trend started shortly after the keynote and continues until now, and probably will for the next days/weeks...

apple is a grat company that has done a lot for the average joe in terms of making it easy to use the web, not just surfing, but getting average peoples message out there... it's about simplicity, and that's what the pc guys don't get, make it easy for people and we will be happy, oh, and please, don't crash in the process... lol...

The market is a bit confused. I think a lot of the backlash is from those that are long "competitors" like RIM. Has everybody seen how RIM tanked after the iPhone was unveiled? I was in shock! The iPhone will hurt Motorola, and Nokia far more than it will hurt RIM, as it caters to the same market. RIM's main income stream comes from the corporate infrastructure and services that it has set up, not from the personal/casual user that wants music and e-mail/internet capabilities on their phone. Back to the topic, I think that you will find the bashing of Apple is a backlash from the way that the announcement adversely affected the entire mobile divices sector ... is it fair, no. Is it real, yes. In the same sense that other mobile device makers were affected even if they did not "play" in the same space as the iPhone.

$150 by 2009? Just wait for a couple of month...nobody can stop Apple.

Apple has a positive future since it is a company that has fans (unlike Dell or HP or others that are somewhat generic manufacturers). But you have to realize iPod or iPhone Or Mac are like BMWs in their respective product categories.

While everyone wants one, not everyone is going to buy one. So, in the longer run, I think this is a good stock to buy, but I don't think this will go up the way Google did.

Just my $.02

The favourable componenet pricing the staff writer mentions also benefited the competition during the quarter. Any component price increases will impact Apple's MP3 player competitiors - actually even more so, since they don't have Apple's volume.

As far as Mac sales go, just to coming at roughly the same unit numbers as the September quarter is fantastic. Remember, Apple does not yet have a corporate market the same as Dell or HP. So end of year buying for budget reasons doesn't apply.

Earnings were better than anyone had expected. They sold 30% more iPods than estimates.

They will release the AppleTV next month, which will be a new revenue stream.

They will release a new version of OS X next quarter, which could add another $500 million to $1 billion to this year's sales.

They will release the iPhone in six months, which will be another new revenue stream. And that's if they don't have any other surprises for us this year.

Eight firms raised their AAPL price targets by between $5 to $25 today, half of them by more than $10.

This is the fourth year we are hearing iPod will be negatively impacted by competition. Do you seriously believe there is anything out there that can challenge the iPod/iTune experience?

Then there is school buying, Adobe updates, holiday gift card sales which will be used this quarter. These are just what we know. There could be more still, as you might tell from references to the Beatles during the keynote, other movie studios that might come on board, and most especially, what other role Apple may be considering for the OSX we saw on iPhone.

This company now has $11.9 billion in cash! Any way you look at it, Apple is doing just fine.

All the Market is saying now is tomorrow is option expiration day.

Apple is not down, it just gave up the gains of the last week. Intro of iPhone was excited; stock jumped up. However, money is not to be made on iPhone until it comes out, and that's not soon, so excitement had to cool down.
Also, it got too expensive. At that price, Apple stock was not a great deal anymore. Retracement would have happened if not now then later. P/E was over 40 when industry average is around 20.
The products are very strong, and the stock will come back up. It should beat the market this year.

These are the results from a poll on Yahoo! Finance questioning whether people would buy an iPhone. Apple aims for a 10% market share; this poll shows just that and even more.

Do you plan on buying an Apple iPhone?
Yes 12%
No 81%
Not sure 9%
25008 Votes to date

It is incredible that Apple reports indescribable numbers that many of us shareholders could only dream of, yet the stock sells off like mad. The reason, soft Mac sales and poor guidance. First of all, since when should anybody worry about Apple�s guidance, they always sandbag their numbers. Take this quarter for instance, Apple guided somewhere around .65 cents EPS and $6.4 billion in revs and they report stellar number of $1.14 EPS and $7.1 billion in revs. That�s a whopping .36 cents above the consensus of .78. If Microsoft ever reported a number like that, analysts would think the world was coming to an end. So using Apple�s guidance as an excuse to sell off is nonsense. Second, the weak Mac sales should not be a concern to anyone. Like a previous posting stated, and something which should appear readily apparent to anybody with some common sense, there are probably a multitude of Apple customers who are waiting for Leopard to release before making a Mac purchase. Additionally, people don�t buy computers for Christmas, they buy them for school, hence you cannot expect Apple to report a larger Mac number than Q4 with the combination of seasonality trends and the anticipation of the Leopard release.
Further, this stock will continue to do well as Apple broadens its product base and innovates new standout products. A note on the iPhone; it will be a huge success most likely selling around 15 million units for the full 2008 calendar year. One sidenote; as Apple is known for sandbagging its earnings guidance, why wouldn�t they do the same for iPhone estimates so they can surprise to the upside as always. Many people are going to Cingular stores trying to get some news on the phone and the specifics. Not to mention the loyal customer base of Apple, the US consumer will go wild for the new hot tech device to hit the market. The iPhone will be drive by the �cool� factor, and its functionality. Apple has always been known for creating convergence devices that incorporate highly functioning technology with the combined ease of use. Not to mention the iPhone will not launch with just the features that Jobs announced, Apple will surprise us as always with some new additions prior to launch.

Actually, the Gartner study you quote shows that Apple's growth IS head-and-shoulders above other players -- on their home turf: In the profitable US market where Apple gets the majority of its CPU revenues, Apple's growth (according to Gartner) was 31% vs. HP at 16%, Toshiba at 22% ... and Acer isn't even big enough to be on the Gartner chart. All this in a market that shrunk 3% vs. year ago. Like it or not, that's serious growth for Apple, at a pace that's well ahead of the pack.

This is just going to be a buying opportunity spurred by people looking for cracks. Fact is that Apple has locked up the MP3 market. I was in an Apple Store just before Christmas and overheard a teenage girl telling her dad that she wanted the new Shuffle for Christmas because then she would have the IPOD, The Nano, and the Shuffle, and she wanted the Video IPOD when it comes out. People are beginning to buy multiple models of these things. This story has just begun. Keep on spreading the doom and gloom. I'm going to be a buyer on the weakness.

Satellite Radio, XM and SIRI, are the next step. Although the IPOD appeals to command and control in all of us, replacing record collections, portable tapes and CD players for convenience, if not audiophiles, the next phase is the unpredictability, and diversity, of a show in progress. And no where else is that best done commercial free than with SATRAD, up to 170 channels of music news sports, even TV leads. The car is now your music hall, and always has been.

When AAPL recognizes this and joins in one device both recordable downloadable and XM radio, it will reach 1969--when AM/FM taperecorders took over the listening world.

Till then IPOD has crested, and the public will get tired of listening to the same 100 tunes over and over again, just as I did back then.

I would expect such a "quality" article in a "e-sometheing" newsgroup, not here.

I continue to laugh at the millions of trend chasers that buy IPODs and spend $1 per song when there are MP3 players just as good that go along with services that allow you to download 50,000 or 500,000 songs for $8 a month.

At some point Americans are going to realize that the point of the stupid things are to play music and when it comes to playing music, Apple rips everyone off.

Well, CNN, C!Net, theStreet, The Register, ZDNet, and a couple of the Aussie and NZ IT rags consistently spin the worst "if" scenarios about Apple--
When Apple does incredibly well, these guys start yelling about how it is going to be impossible to keep up the pace, or there will be this or that product that will compete with (insert object here). Lou Dobbs has a special disaffection with Apple-- you can only hope that none of the above own an iPod, though I suspect they do as they are writing articles that might profit their "Shorting" of Apple stock. Oh, sorry!! No way they would do that, right?

Component prices will affect all companies, not just apple.
I would say Apple can weather price fluctuations better than other companies due to their premium cost.
If other companies premiums are low to keep their player cheap...when the component costs rise....that company could lose money, or be forced to raise the price of their player.

Absolutely hilarious--but shouldn't this have been posted on Comedy Central's website? I mean, this MUST be a satire, right? Sort of a Colbert Report for business "news?" After all, if complaining about higher gross margins wasn't intended to be laugh-out-loud funny, what was the intention? And I nearly busted a gut when I read that the last quarter of 2007 was a "time when serious competitors to the iPod are just starting up." (The brilliant unspoken punchline to this, of course, is that Zune is the first "serious" competitor.)

My only complaint about this article is that you should clearly note that it's intended as satire and comedy, so that readers understand that it has nothing to do with facts.

Psst. . .did you hear? Neiman-Marcus is losing market share to Walmart and we expect their stock to drop into the toilet any moment. After all I think their "component" costs are higher than Wally's. There are an awful lot of "I told you so" wanna be's here. Actually anywhere around Apple. I guess they figure, even a stopped clock is right twice a day, and maybe this will be their lucky day.

With if ? and Maybe ? and if this then maybe that...
How about some meat on the bone? A personal agenda against APPL perhaps?
Record numbers - come on - get positive.

Another editor's note: just to clear up some mean insinuations in some of these comments--editorial employees of Time, Incorporated (which includes all the contributors to The Browser) are prohibited from all short sales, as well as from any kind of futures or option trading. The notion that the journalists on this site would write negatively about a stock in order to profit personally is pure fantasy.

Oh please look beyond the obvious margin data (which you have shown no financial credibility with this article).

Scrutinize the financials and ask yourself: which other vendor has the clout to turn an increasingly negative Cash Conversion Cycle?

If this is not a concrete indication of pricing power over suppliers, I don't know what else is.

Well, Apple's gross margins are always right around 27-28% for perhaps the last 6 years - so how is it bad that they they record profits with an extra goosing this quarter - so even if that goes back down to the normal 28% - how is that bad again? ESpecially since by next quarter, Leopard will be here, hopefully desktop sales will rise with the 8-core or with Adobe's CS suite (Almost slower than MS) and that little thing called an iphone which will presumably start selling in April or may? Oh yea, or maybe the Beatles widescreen ipod ... yea, sounds like a weak quarter coming up to me - so yea, everyone start selling ... you don't mind I am a contrarian and start buying, do you?