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Apple's (Nasdaq: AAPL) share prices have begun climbing back since Feb. 23, closing Tuesday at US$208.85. It's not yet quite clear why -- it could be the imminent shipping of the iPod or the shareholders' meeting Feb. 25, among other things. Still, investors should take what they can get.
They'll have to -- Cupertino isn't about to fork over any dividends soon. The company wants lots of cash on hand for security and so it can make big purchases without having to borrow lots of money, CEO Steve Jobs explained when asked about dividends.
Jobs also ruled out stock buy-backs, a stance Broadpoint Amtech analyst Brian Marshall doesn't agree with.
"At $40 billion of net cash, Apple is underutilizing this asset," he told MacNewsWorld. "They should at least start buying back around $1 billion of stock per quarter."
Marshall thinks Apple will continue to buy smaller, private tech companies and integrate them into its infrastructure because it hasn't found a large one that fits its criteria so far.
Heading to the Middle Kingdom
Jobs also announced at the shareholders' meeting that Apple is going to open 25 new stores in China over the next two years.
"Opening 25 stores in China over the next two years is great," Marshall said. "International growth is the key to Apple's continued success. In my view, the biggest single driver of its stock over the next 12 months will be the continued ramp or expansion of the iPhone in international markets."
There seems to be strong demand for the iPhone in China. It has a huge grey market for iPhones, and imitation iPhones apparently sell well.
Apple might be able to take more advantage of the demand if the iPhone were more affordable -- the average selling price of the device has gone up to about $620. That is a respectable bite out of the average urban Chinese worker's $4,300 annual salary.
Saturday Night iPhone Specials Coming?
Perhaps Apple, which has always been known for catering to the high end of the market, is thinking of expanding to the lower end now. It's planning to launch a series of lower-cost iPhones in June, some analysts predict.
Apple's willingness to be flexible on price isn't new. Shortly after launching the iPad Jan. 27, its executives said they'd be willing to cut the device's price to suit market demand.
However, not all analysts are convinced that Apple will bring out a cut-rate line of iPhones in June.
"I don't see any changes to the iPhone's price structure coming over the next six months," Broadpoint Amtech's Marshall said. "There's no need to, as it's selling very well."
Apple traditionally brings out a new line of iPhones in June. Whether it offers a new series of budget devices or sticks to the high end, it'll be in a win-win situation. Cut-price devices will extend its reach to the lower end of the market, and regularly priced new iPhones will continue to sell to Apple fans.
Feeling Publishers' Love
In recent days, publishers have begun flocking to the iPad. One is The Associated Press, which plans to launch a paid news application on the device to generate income for online content. This will offer custom packages of headlines, stories, photos and videos from the AP as well as newspaper and broadcaster partners.
Hmm... don't you already get that with My Yahoo (Nasdaq: YHOO) and iGoogle? For free?
Perhaps Conde Nast, publisher of a chain of magazines including "Wired" and "GQ" will have better luck. It plans to offer an iPad version of "GQ" in April. This will be followed by "Vanity Fair" and "Wired" in June, then by "The New Yorker" and "Glamour."
The publisher already offers iPhone apps for "GQ." It has sold 22,000 copies of two issues at $3 apiece. Conde Nast publishes 19 print magazines, and Conde Nast Digital runs 27 sites, including Wired.com.
"I view the iPad as an incredible media player," Broadpoint Amtech's Marshall said. "It's really for Web browsing, e-reading, gaming, and watching movies or television."
Won't Apple's refusal to embrace Flash slow down demand for the iPad? Not likely, Marshall said.
"The iPad will continue to attract content to the iTunes App Store," he predicted. "Content providers will have to encode in MPEG4/H.264 just as Google (Nasdaq: GOOG) does for the iPhone version of YouTube."
When Is the iPad Coming?
The iPad's release may be delayed because of production problems, suggested Peter Misek, an analyst with Canaccord Adams.
Hon Hai, which makes the iPad for Apple, is experiencing a manufacturing bottleneck that will severely reduce the number of devices available and limit the initial release to the United States market, Misek said in a research note.
Hon Hai will only be able to turn out about 300,000 iPads in March, he predicted, instead of the one million originally projected.
It will also fail to meet Apple's plans to turn out 800,000 iPads in April, according to Misek, who warned that the production bottleneck might even force Apple to delay the iPad's launch.
However, reports of the production logjam may be nothing more than rumors.
"No one here has any information on this," iSuppli spokesperson Jonathan Cassell told MacNewsWorld.
His company should know -- it tracks supplies and parts worldwide and regularly provides breakdowns of the cost of producing high-tech devices, including iPhones and iPods.
Perhaps Apple is manipulating the grapevine to lay the groundwork for a cut in projected production if demand doesn't come up to expectations. We'll know later this month, when the iPad hits retail shelves. Until then, taking what we can get as investors is the smart thing to do.
