AmTech’s Shaw Wu is no dummy. He’s onboard with all that chatter about the sexy new iPhones Apple (AAPL) will reveal next week, but he wants to remind you about the oldest rule in the book: Buy the rumour, sell the news. (And think about what would happen to AAPL if Steve Jobs didn’t announce an amazing new iPhone).
Wu still thinks Apple’s a must-own long-term play, however. And given the resurgence of Apple’s dumpy old Mac business (which actually drives the company’s financial performance), it’s hard to disagree with him. (See “Christmas Present For Apple Bulls: Macs Cleared For Takeoff“)
AAPL will host its annual WWDC event in San Francisco next week, with Steve Jobs’ keynote on Monday, June 9, 2008. This has historically been a Mac-focused event, but this year we anticipate additional focus on its other devices.
- New iPhones: As most investors expect, our supply chain contacts suggest new iPhones, including new 3G models and a lower cost 2.5G refresh.
- Pricing and possibility of subsidies is a highly discussed topic. We anticipate pricing for 3G hardware similar to current price points and 2.5G versions to see a $50-$100 discount. Signs indicate AAPL has become more focused on driving volume, raising the possibility of carrier subsidies. Today, 2.5G data plans add $20 to the monthly subscription.
- New iPhone Features: We are picking up on an improved virtual keyboard with haptics, GPS/location services, and thinner casing.
- Potential New Form Factor: Our sources suggest new form factor touchscreen devices (4-inch and 7-inch) are beyond prototype stage. We see a 50% chance these are announced at WWDC. These devices appear to be a hybrid between a Mac and iPod touch. Timing is not clear, but we believe these devices will eventually be brought to market.
- New Macs Less Likely: While WWDC has historically been a Mac-focused event, we are not expecting new hardware announcements. We continue to anticipate a radically refreshed design this summer or fall, with volume shipments more likely in the September quarter.
Conclusion: AAPL shares are often volatile around Steve Jobs’ keynotes. With new products widely anticipated, we do not have a good feel for how the stock will trade on new product announcements, which are sometimes “sell the news” events. We would take advantage of weakness to add to positions. AAPL remains a must-own large-cap tech stock and we encourage investors to accumulate shares on pull-backs. Reiterate BUY and $220 target.
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