I feel like I'm calling into a talk radio show - "long time listener,
first time caller."  Anyway, I've had the education of a lifetime the
last two months - paid the tuition check on Dec. 27 (ugh....my
accountant is going to kill me) and had final exams the last few days.
I aced my midterms this week, but the finals are still to come.  I
expect a 4.0.

Anyway, great discussions on this board.  It takes a while to filter
the wheat from the chaff, but there are good folks here that are eager
to help others.  I like that.

(To a few posters' dismay) there was no mention of earnings yesterday.
I believe this is because the number will be such a blowout that it
wasn't worth pre-announcing and lumping with the iPhone.

But a part of Mr. Jobs' speech really caught my attention.  These
weren't just words (like the mis-interpreted quote on Macrumors), but
actual displays on the screen.  No slips of the tongue here, but edited
and reviewed Keynote slides.

1) Through November, Zune had a 2% market share; Apple had a 62% market
share.  Data was not available for December.

2) The annual market for MP3 players is 115M units.  He used this
figure before showing the market of 950+M cell phones.

3) Apple sold 25M iPods in 2006 Q2 - Q4 (Jan 1 - Sep 30 2007).  Source:
SEC filings.

4) If the figures on the Keynote slides are correct, a 62% share of a
115M unit market is 71M units.

Could Apple have sold 46M iPods in Q4?  (Indeed, could Apple have
SHIPPED 46M iPods?)  That's about 500K a day.  Possible?  I have no
idea, but I bet analysts are trying to figure that out (or already
have).  I do know that they aren't going to be too forthcoming with
such wild numbers.  They'd be laughed at.  (Can you believe Morgan
upped its target to $98 today?  Blockbuster!)

Run the numbers:

1) Average iPod price is $207 (source: SEC filings/my calculations).
Take that down to $200 for ease of numbers and the $20 price point
reduction for the new Shuffle.

2) 46M iPods @ $200 is $9B in revenues.

3) Apple's avg margin is conservatively 20% (again rounded down).

4) $1.8B in iPods gross profits 07Q1?  That's $2.00 per share.  Apple's
effective tax rate is about 30%.  High estimate of $1.40 earnings just
for iPods?

Far-fetched and simplistic, but where am I going wrong?  I think maybe
the 115M market size is too big.  But 1 MP3 player for every 9 cell
phones in the world isn't too implausible....  Of the people I know
with cell phones, I think I could find 1 MP3 player for each 9 phones -
and I don't hang out with very young people!

Say this is somehow twice as big of a number it should be and Apple
only (!) sold 23M iPods.  Cut the numbers in half.  $0.70 07Q1.....just
on iPods?

That doesn't even start to account for the increasing PC market share,
the blowout sales of MacBooks, etc.  And Mr. Jobs just re-vamped the
entire iPod line yesterday - Apple just hasn't announced it yet.

(Disclaimer: I outlined and sourced the above comments, what follows is
just conjecture)

What could bring the stock price down at earnings?  Lower than expected
guidance.  Are we expecting Apple to guide lower than previous
estimates, considering all of the talk of the iPhone cannabilizing the
iPod market (a CNBC guest said they expect 50% cannabilization)?

Apple will guide conservatively, but not below the analysts
expectations.  iPods will not be cannabilized, because they will
release the new wide-screen non-phone iPod.  I'm expecting up to 120GB
at the same price points as the old ones.  That's in line with Apple's
typical pricing model.  Pick a price point that works and put Moore's
Law to work.  This upgrades and completes the line: shuffle, nano (the
click wheel isn't going anywhere and nike has an awesome investment in
the nano - it's the perfect high-class, mid-level MP3 player), and now
the wide-screen non-phone for video and super high capacity users.

After all, what was in those shipping containers, realtyprov...?  Not
the new iPhones, but the new iPods.

Apple, Inc. has settled all claims from the Apple across the pond.
There is no name change without such an agreement.  They kissed and
made up (or been paid off/bought out).

The new "U2 iPod" will be the Beatles iPod.  This is a no-brainer.
Either the launch is delayed because of the McCartney divorce mentioned
elsewhere (plausible if true, but I have no research there), or to give
another excitement bounce down the road.  Remember that this ENTIRE
year is slated to be full of amazing announcements.

Cisco is a non-factor.  I bet they don't even know that when they
weren't protecting their trademark, Apple went and filed for a new
trademark.  The guys in Cupertino are so shifty.  No, ruthless.  Tease
Cisco with negotiations and make them sign an NDA so they can't discuss
negotiations until after the announcement of the phone.  The more NDAs,
the more people keep their mouths shut.  When Cisco doesn't extort its
fee before MacWorld, it goes public with a lawsuit.  Apple plays along
(for how long? a night? a few days?) and then they release a filing to
the press that says they filed the trademark earlier this year.  Cisco
is now in violation of Apple's trademark and Apple gets something from
an embarrassed Cisco.  Mr. Jobs and Co. are geniuses, but are Cisco's
lawyers that stupid?  I can't imagine that they are, but I wouldn't put
it past Apple to do what I described.  What's the government lag time
for publishing trademark claims?  Patents take a while to come out....

You HAVE to release product to keep a trademark.  Other posters have
made that clear.  I'll add this to the discussion: my alma mater, USC,
makes a big statement in the annual football media guide instructing
the media to not use the term "Southern Cal."  Yet, the bookstore
produces one "Southern Cal" branded item each year.  It's in small
quantity and it's obscure, but it protects the trademark owned by the
University.  Cisco can say that they own a trademark filed in 1996 (11
years ago), but they never exploited it.  Apple stole the trademark.
They're not stupid.  Is Cisco?

I confirmed all of this in my mind when I saw the smirk on Mr. Jobs'
face during the Nightline interview.  Can you imagine what it must feel
like to give a 100 minute speech that added $6B of equity to your
company (of which you own a nice piece)?  Compound that by secretly
knowing that what's still in the pipeline will dwarf that $6B.....  I
bet that lunch and a movie with Phil and Jony yesterday were heady
times.

If Apple has proven anything, they are master marketers, led by Mr.
Jobs.  Master marketers are master PR artists.  If you believe that
"hedgies" can manipulate news (and I do believe that), a secretive
company like Apple with an amazing PR staff can orchestrate these
announcements over the course of a year (as the marketing has told us)
and create billions of dollars of equity over months rather than 100
minutes.  Was there ever LESS (in terms of number of items) discussed
at a Steve Jobs Keynote speech?  It's all coming, folks.....

[Now I'm venturing into an area I'm not sure I should.....prices]

Yesterday I was concerned whether Apple would pass its historical high
of $93+.  Boy did it pass it!  Did anyone watch the stock bounce off
the mid-$93s for about 5 minutes this morning and never get near it
again?  Technical traders will point out that the old high (resistance)
becomes the new support, right?  100M shares have been traded above
that new support in just one day.

I take it one step farther.  Hate to sound overly dramatic, but I think
that $93 will not just be a support level, but the new $0 for "Apple,
Inc."  The game has changed.  Once the iPod was realized, did the stock
ever go south of where it was pre-iPod?  What about iTMS?  I bought my
first shares of Apple in April 2003 when I read about iTMS.  Even
though it was available only on Macs, it was the digital solution the
world needed.  The price was $6.50 (split adjusted).  I'm not sure it
ever went below that again (i haven't researched that tonight).

I won't make guarantees and don't want anyone to make a purchase based
on this brain dump.  It was on my mind and now I've published it (Web
2.0, eh? That's why Time named me Person of the Year!).  When I read
this again tomorrow, I'll probably be upset at my too-extensive use of
parenthetical comments and I'm sure there are some typos.  I'll be so
disappointed in how my written words represented myself.  But I don't
feel like editing and re-writing.

One more thing.  I believe it was Becca who implored a noob tonight to
"have targets."  You're nothing without targets and time frames.  My
target is $105 by Q1 earnings announcement and $150 3 or 6 months later
(haven't decided yet).  There will be ups and downs, but my year end
target is $200.  I don't expect a stock split, since Google has made it
cool to have an astronomical number attached to your stock price,
online trading provides fixed investment costs ($9.99 of whatever
amount you are trading) and round lots are so last century.

[Note: I submitted this at 22:21 MST on 1/10.  Let's hope Google Groups
approves my new account!]