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Phil Schiller provides the keynote address at MacWorld today at 9:00 a.m. PST (12:00 p.m. EST). The expectations are very low for revolutionary new products. Expect updates to the iMac and the Mac mini and a sneak preview of Snow Leopard, the latest version of Apple's operating system. These types of announcements are seen as getting back to the Mac roots since the show is MacWorld.
The big news is talk that Steve Jobs is going to make a cameo at the end of the keynote. Yes, it would be nice to see Steve on the stage where he wowed people for years, introducing sleek new products that brought Apple back to life. The audience at MacWorld would be certain to send up a major round of applause for Steve, but this would just further raise the issue that Apple's fortunes are directly tied to Mr. Jobs and that the company is under the tight grip of its founder and CEO.
Given all the talk about Apple's deep bench of management, why not let Phil Schiller carry the day? In fact, if Apple was serious about showcasing that the company is much more than Steve Jobs, let Phil introduce a flashy, new product such as a $99 iPhone.
But with all the talk on Steve and MacWorld, it's worth revisiting why we are on the sidelines for Apple (and sellers on any rally) until the springtime.
Let's look at a few bear facts on Apple:
- The brunt of the slowdown in consumer spending is likely still to occur, with the March quarter very much at risk.
- Data points yesterday on consumer habits were dismal. December auto sales were a disaster, with Chrysler sales down over 50%! Borders' (BGP) same-store sales over the holidays were down over 14.4%. Yes, the consumer loves Apple's sleek products, but they are premium priced and definitely discretionary spending items.
- The December quarter's EPS guidance is $1.06 to $1.35, while Street consensus is $1.40 (high is $1.52; low is $1.22). Of course, Apple tends to guide conservatively, but the quarter needs "upside to the upside" to boost the stock up.
- Even if the December quarter delivers, the March-quarter guidance that Apple provides is likely going to be below the Street consensus of $1.15 (high of $1.34 and low of 81 cents), so good December-quarter results are likely to be tempered by poor March-quarter guidance. What if the March low estimate of 81 cents turns out to be the one that is correct?
So it's hard to get excited on shares of Apple until we get closer to the spring and past the March quarter. One added benefit of waiting to revisit going long Apple during the spring is that it should be clear if Steve Jobs is gaining weight by then, as he suggested he would in his public letter yesterday. While that still does not remove the fact that the company has a major succession problem, at least it may provide comfort that the day for a new CEO is off in the distant future. As always, we wish only the best for Steve.
Know What You Own:
Apple operates in the computer hardware industry, and some of the other stocks in its field include
International Business Machines
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At the time of publication, Gillis had no positions in the stocks mentioned, although holdings can change at any time.
Colin Gillis is the director of research for
, focused on driving the premium product offerings. His focus remains media business models that lever the Internet. This includes publisher models, SEM strategies, networks and exchanges, video strategies, virtual worlds, performance-driven customer acquisition and converting advertising models into data-driven models.
Prior to joining
, Gillis was a senior Internet analyst at Canaccord Adams, a global investment bank. He has been academically published on the topic of computer parallel processing.
Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.