360 Degrees of Apple

Apple Takes On the Broadcasters, by Cody Willard

This column was originally published on RealMoney on Sept. 13 at 11:09 a.m. EDT

To expand on what I quickly noted about Apple's (AAPL Quote) new iTV product yesterday, this will mark the company's first formal foray into taking the cable and satellite companies head on. Downloading TV shows and movies isn't just about taking on the DVD and VOD businesses. This product is all about taking on the broadcasters themselves.

No longer will people in their living rooms be beholden to broadcasters that choose what content at what time gets pushed out to consumers' television sets. As Apple continues to add content (which, by the way, can be stored indefinitely and at practically no expense) of more TV shows, movies, user-generated content, sporting events, and so on, consumers will increasingly choose to use the iTunes store to pick what they view instead of flipping channels.

As I outlined yesterday, broadcasters and production companies have made many billions of dollars off their model of bundling 24 hours of content per channel and hundreds of channels per package. Apple's ability to deliver a consumer-friendly, easy-to-use platform for consuming unbundled video content puts the bundling business fully on the path of secular decline. Broadcast won't go away, but its glory days are fully behind it.

Apple's easy-to-use technology and iTunes' status as the de facto standard for legal digital downloading, along with the iPod's increasing ability to store hours upon hours of content, set it up for huge success in this business. But to be sure, it won't be the only winner.

Google (GOOG Quote) will have a place in distributing video content to your TV, too, perhaps leveraging the very same iTV device that's coming to your living room. And Microsoft's (MSFT Quote) Xbox 360, as well as Sony's (SNE Quote) PS3, are going to enable them to get into this business, too. And private companies like Akimba, Brightcove and YouTube will make their impact felt as well.

The revolution, enabled by incredibly cheap processing and ever-faster and cheaper broadband, is here. Both processing and broadband will continue to get faster and cheaper, and that will help to accelerate this paradigm shift.

Apple is set to be the big winner. I do worry that there is too much fast money and too many mo-mo traders who have plowed into this name leading up to yesterday's announcement, and I'm concerned about the potential for major problems from its options-backdating issues. However, there is no way I'm going to sell my Apple stock, which I've owned since the dawn of the iPod. This one has been a long-term winner and is set to be a long-term winner in the future.

At the time of publication, the firm in which Willard is a partner was net long Apple, Google and Microsoft, although positions can change at any time and without notice.

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Take Some Profits, by Richard Suttmeier

Apple was one of the top-performing stocks in 2005, but it's had a volatile ride in 2006.

I believe the recent rebound was in anticipation of the product announcements we heard Tuesday. Apple had been on the rebound and has reached its fair value of $73.25 and my quarterly risky level of $73.55. A risky level is a level at which investors should consider booking profits, and I think that would be merited in this case. From its July low to Monday's high at $73.73, Apple has risen 46.9%.

Nonetheless, Apple has a history of becoming overvalued, and its weekly chart profile isn't yet overbought. Thus, even though I suggest some profit-taking, if it closes the week above $73.55, it could rise to my higher quarterly risky level of $79.90.