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Monday, October 02, 2006

Apple's Stock Price: A Bridge Too Far? (AAPL)(MSFT)(DELL)(HPQ

Apple's shares rose from $58.97 to $76.98 in the quarter ending September 29, an increase of 31%. Given the fact that that company has not be able to file a 10-Q since May 5th due to potential options back-dating issues, that run-up is extraordinary. The company did announce earnings, but whether there will be any restatement of earlier periods is not clear.

Apple may be doing well, but perhaps not 31% per quarter well. The iPod is clearly the multimedia market leader with sales in excess of 7 million units, but that growth could be slowing as the market waits for new models.

Investment firm Needham & Co. is forecasting Mac sales at above 1.5 million units for the September quarter. In the same quarter last year Mac sales were 1.2 million. However, according to Apple's 10-Q for the quarter ending 4/1/2006, Mac sales were 1.572 million, so the forecasts for the September quarter are hardly spectacular.

Then there is, of course, the matter of competition. Companies like Hewlett-Packard, Lenovo, and Dell are unlike to part with PC market share easily. And, companies like Microsoft and Sandisk are entering the iPod's realm of the portable media player. Whether they are successful or not remains to be seen, but Microsoft is likely to spend hundreds of millions of dollars trying.

Apple's share price run of 31% may be a bit much.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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