Apple Stock Near Record High: iPod Cellphone Rumors Trump Flawed iTunes Stats

A cellphone that doesn’t yet exist has never been so popular. For the past few months, rumors have been flying about Apple’s entrance intothe multi-billion dollar cellphone market with a feature-rich iPod cellphone. Apple has been called “hypersecretive” and has refused to comment on the speculation which, of course, feeds the speculation fire even more.

But at the same time, a report last week from Forrester Research claimed that sales at Apple’s iTunes music store were off as much as 65% from the beginning of the year after surging last year. Bloomberg and The Register quickly published articles commenting on the supposed steep drop. The news made it to investors, and Apple shares dropped nearly 3% on December 12.

However, the 3% drop due to iTunes stats is fairly minimal compared to the buzz surrounding the iPod cellphone. Wall Street analysts and investors are now valuing the company based on an expected iPod cellphone release. The highly coveted MacWorld is next month, the San Francisco conference where Apple CEO Steve Jobs is known for introducing new gadgets.

If Apple does enter the cellphone market, the company will likely gain a serious increase in revenue: definitely good for current shareholders. But right now may not be the best time to jump on the Apple investing bandwagon, as the stock is relatively expensive already having taken into account an iPod cellphone release. And if Steve Jobs and company disappoint the impatient shareholders and investors by not releasing the phone next month… bad news.

In other words, even if Apple originally had no intention of getting into the cellphone market, they probably do now. It’s in their best interest to avoid disappointing the world. The tail may have begun to wag the dog, my friends.

Several recent analyst reports predict Apple being capable of selling millions of phones within a few years, bringing in billions of dollars of revenue. Some analysts take it one step further and predict the impact of an iPod cellphone on wireless carriers, parts suppliers, chip makers, etc.

But others believe the Apple phone could cannibalize current iPod sales if consumers buy the phone instead of (rather than in addition to) regular iPods. This would obviously limit the revenue increase, though Apple didn’t seem to have much of a cannibalization issue when releasing the video iPod.

Whatever the case, the company’s stock is trading at “near-record territory” despite the released iTunes stats claiming that online music sales are declining. Incidentally, another report quickly followed the original released by Forrester. Online-research company comScore Networks estimated that sales for the first nine months of 2006 were up 84% from the same period a year ago. These stats are practically the exact opposite of those reported by Forrester.

Since Apple doesn’t break down iTunes sales in its financial reports, research companies tend to jump in and do the guess work, releasing numbers that are taken seriously enough to make stocks dip 3% in one day. But that may be peanuts compared to how seriously rumors are being taken about the iPod cellphone.

Be Sociable, Share!