Apple-Wal-Mart Pact Praised

Discussion in 'General Mac Discussion' started by neildmitchell, Jun 18, 2005.

  1. neildmitchell macrumors 6502a


    May 21, 2005
    Link to Article

    Apple Computer's stock got a boost on Wednesday amid upbeat comments by a Morgan Stanley analyst, who said the computer maker's pact with retail giant Wal-Mart Stores may be broader than some realize.

    "While we don't believe Apple iPod availability at Wal-Mart is completely new news, we do think the partnership is broader than people think, in transition and set to expand in the near-term," asserted analyst Rebecca Runkle in a note to clients.

    Apple and the world's biggest retailer have been expanding their pact to sell versions of Apple's wildly popular digital music player from a test to a full partnership, marking a new development as of the last few months, according to Runkle.

    Sales of iPods at the Bentonville, Ark.-based retailer's locations could boost Apple's iPod sales by 100,000 units and add $20 million in revenue each quarter, according to the analyst's conservative estimates.

    "We view the growing Wal-Mart relationship as a positive -- a way to expand the brand to the mainstream and additive to the bottom-line," she commented.

    Meanwhile, Runkle said that chatter about mounting inventory of Apple products "may prove to be overblown."

    "In fact, we do not believe Apple has a major inventory problem," she said. "We think much of the inventory chatter resulted from inventory increases ahead of broadening retail partnerships and sell-in ahead of new product launches."

    Runkle's checks with retailers don't reveal excess inventory, while many stores are sold out of some iPod models, she said.

    The analyst maintained an overweight rating and $60 target price on Apple's stock, saying that strong sales of the latest version of the company's operating system, called Tiger, and its Mac computers can offset any volatility in iPod results for the near term.

    Runkle expects more product announcements from Apple over the summer and said she's a buyer of the shares on weakness.

    Elsewhere, Smith Barney Citigroup analyst Richard Gardner said he would use strength in Apple's stock to reduce exposure to the name.

    Gardner lifted his outlook for personal computer unit growth for this year and next, but said he continues to have some reservations as positive factors that helped prop up demand in the first half wane.
  2. iJon macrumors 604


    Feb 7, 2002
    I guess I'll have to drive up the road to Bentonville to see if they have them. I've been seeing ads for iPods at all the Wal-Marts in my city, which is about 15 minutes from Bentonville. Smart move on Apple's part whether you like Wal Mart or not.


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