Apple Sets 2-For-1 Stock Split, Stock Up

Reuters | February 11, 2005

[HAL9000]

NEW YORK (Reuters) - Apple Computer Inc., whose shares have almost quadrupled in value over the last year on the success of its iPod music player, on Friday said it set a 2-for-1 stock split, and its shares rose almost 4 percent.

Shares of Apple have been on a tear as iPod sales have soared with the introduction of less-expensive versions of the music player. The stock has been the best performer in the Nasdaq 100 index and the wider S&P 500 index over the past 12 months.

Apple is also one of the most expensive stocks among the 30 largest technology companies that make up the Computer Technology Index trading on American Stock Exchange.

Apple's last stock split had been in 2000, at the height of the technology boom. Previously it had had a stock split in 1987

Splits do not change the value of stocks but tend to make a stock more attractive to small investors who are often wary about betting on high-dollar stocks, experts said. Splits may also indicate that management has confidence in continuing to grow earnings and that as a result the stock price will rise.

But the high expectations indicated by a steep share price can mean that the company has less room for disappointment. For example, shares of Internet auction company eBay have lost about 20 percent since Jan. 19, when it reported earnings below Wall Street expectations for the first time in at least three years.

Apple is trading at 39 times over its projected for earnings per share next year, compared with a price/earnings ratio of 14 for Hewlett-Packard Co., Dell Inc., the world's top personal computer provider, has a P/E of 32 and Gateway carries a P/E of 30.

But many analysts continue to favor Apple.

Pacific Crest Securities analyst Steve Lidberg said, "We continue to like the stock. The momentum behind iPod and the new Mac products continue to bode very well for the company to exceed expectations in the next several quarters."

He added, "The split makes it a little bit easier to buy for individual investors but it does not change the fundamentals."

Among the 26 analysts polled by Reuters Estimates, 15 rated Apple "buy" or "outperform," 9 rated it "hold," and only one had a "sell" rating. One analyst had no opinion.

Apple has posted better-than-expected earnings and revenues for at least the last seven quarters, and analysts raised their estimates for the current quarter after Apple raised its outlook.

Under the share split, Apple shareholders of record at the close of business on Feb. 18 will receive one additional share for every outstanding share held. Apple said trading will begin on a split-adjusted basis on Feb. 28.

Apple said there will be a proportional increase in the number of its shares authorized from 900 million to 1.8 billion.

Apple shares rose $2.85 to $81.21 at the close of trade on Nasdaq. The stock over the last year has gone from $23 to an all-time high of $81.99 per share on Wednesday.

[pageonetoo]

Good news to me. I have a couple of thousand shares that i bought Cheap!!! (13 3/8).... maybe I'll go ahead and schedule the next cruise!

[Pearls Before Swine]

...couple thousand shares.... next cruise...

Congratulations! Since you were smarter or luckier than most, what do you think of AAPL now? Are you gonna hold 'em, or are you gonna fold 'em?

[SSR1]

My wife and I just bought a few shares of Apple just last week. I have been watching it for years since it was as cheap as 13 dollars a share.
As for the new mini mac. I also see a big place in schools for it too. Great replacement machine! You already have tons of monitors and keyboards lying around. If you can just replace the brain, why not? Much cheaper. The macs have less problems with spy ware and the like as well. 1.3 gig is fine for word processing and the like. Perhaps it is not for the photoshop experts but it would be fine for learners. I was using photoshop 4 on a much slower mac (7600). now it is 7 on a 2 gig G5

[pageonetoo]

Are you gonna hold 'em, or are you gonna fold 'em?

Hold'em

I played with 10,000 shares of Xerox about the time that AAPL bottomed, and bought Apple in cycles, after converting some significant profits on buying/selling Xerox... some of the Apple cost me as much as $19, but the majority was bought at 13 +/-... but the Xerox cost 4 +/- and sold for 9-13, so i quadrupled my original Xerox investment into another quadruple for Apple...

the last time I did this well on stocks was in 1973, when I bought DP (Diversidied Products, a maker of weight/exercise machies, and the like) for 87 cents, and sold it after IPO... for $17. I just didn't buy enough!

[Terpfen]

The problem with that is that the Mac Mini's hard drive is too small to store much of any HDTV content. I'm also not sold on its video capabilities (Radeon 9200? Come on!) or its sound capabilities (not even Apple lists any details about its sound card.) If you have a network server hosting DVD rips, you could just stream content to the Mac mini and avoid the entire issue of the thing's HD.

I see the Mac mini as a cheap computer. It's not an HDTV yet, though Apple could clearly make an HTPC Mac mini if they wanted to move into that market.

[Glenn]

I see the Mac mini as a cheap computer.

I see it as the new 'cube'.

It'd be a great little computer for grandma and grandpa. I wouldn't buy one for a kid in college. As long as Apple markets it honestly, it should do okay. I doubt it will be the cash cow the iPod is.

[general_re]

[Pearls Before Swine]

I've done well with stocks over the past 15 years (it was hard not to if you paid any attention at all), but you never catch 'em all. Personally, I think Apple is going to do fine as a company, but the stock is within 20% of a multi-year high. Too much competition in the consumer market for iTunes for them to create and maintain a monopoly position.

[Terpfen]

Nah, Shuttle XPCs are the new cubes. The Mac mini is just a good accessory computer. I certainly wouldn't mind having one for the day-to-day computing routine. It just doesn't make a good HTPC, which is a market Apple needs to enter. Partner with M-Audio to get their sound solution, get nvidia's DVD decryption going for the video, and add an HTPC program in Tiger.

[theFIRMbss]

[Leonard210]

I agree with you on the DVD issue, but it is not an underpowered machine. The G4 is not a Pentium. It is designed to do exactly what you assume it can not do...video and graphics. I do both for a living on a G4 with the same specs as the Mini. The G4 has always compared well in graphics and video editing against Intel chips with twice the listed speed. As for games, I couldn't tell you. I don't use my system for games.

[HAL9000]

Yeah, Microsoft was a good inventment 20 years ago.

[Terpfen]

I'm not sure if the OS-tans would get much play around here.

[HAL9000]

oops, that should have been "a good investment 20 years ago"

[general_re]

Two different companies now - Apple is still, nearly thirty years later, not much different from the two-man garage operation where it started. Microsoft, on the other hand, it the dominant software company worldwide. It's like comparing...well, apples to sirloins.

[SunkenCiv]

Yeah, I mostly agree with that (FWIW), and I think the fits-and-starts of TiVo laid some groundwork. Consumer electronics are ever-shifting and profitable, provides one bets right. Marketing it as a low-cost (and mostly unavailable; I've never seen one, and I've been looking) CPU upgrade product looks like a normal course of action. It gauges demand for the product in that category. Showing it as a video recorder and player later could pay off bigtime.

[jriemer]

The problem with that is that the Mac Mini's hard drive is too small to store much of any HDTV content.
You can add mulitple external Firewire or USB2.0 drives for less than a dollar/Gig each if you need to store content near the unit.

As Hodar said, the Mac Mini maybe the uber DVD-home entertaiment hub - not a number-cruncher / gaming machine.

[SunkenCiv]

Oops. "provided" not "provides".

[SunkenCiv]

link from MacNN:

Apple Computer downgraded to "above average"
Friday, February 11, 2005 10:51:19 AM ET
Caris & Company
http://www.newratings.com/analyst_news/article_690679.html

[HAL9000]

Microsoft, on the other hand, it the dominant software company worldwide.

But as a percentage of the installed base of platforms, it's losing that position at a rapid rate.