On Thursday afternoon, RFI released to Apple Recon the "threat" of throwing everything out on the AMP/vMac/Set Top Box, iMac, etc. and letting the chips fall where they may. Using the reminder of the "Independence Day: The 4th of July" reference was all too plain. For it was then that RFI "let loose" on a lot of things in order to "flush the cache" and set things straight. RFI wasn't making an "idle threat" as we were prepared to do a full launch. RFI doesn't make "threats." Threats only work if the other side knows you're prepared and willing to carry it out.
Well, Apple et al can thank a close confidant who asked "who benefits?," if we let loose with it all so close to Macworld Expo New York. So, between that and other things, we decided to make it a "Happy, Happy, Joy, Joy" time with the overall content. Why? Because of the simple fact that it's better to be in the right rather than be proven right. It's as simple as that.
So, the "alleged crisis" has been averted and all things are good to go for Macworld Expo NY. Besides, why waste what will probably turn out to be a really nice pop in Apple?
"Who benefits?" You do. That's the biggest reason of all. That's our main concern.
Instead of leading off this week's RFI Weekly Update with the General Markets, we're going to focus on Apple and Macworld Expo NY - "The Creative World," as well as its runup to launch. No "RFI Apple Recon Weekly Update" this week. Never before has such effort been expended for such an event and never before has there been so much riding on it. In fact, there's a lot riding on MWNY for Apple. The "iMacWorld Expo NY" notwithstanding. For Apple's "Every Eighth" above its 200 Day Moving Average is predicated upon the news and rumors about not only the much anticipated "Consumer Line," but its prospects going forward. And, there's more.
Those who were promulgating the "fabrication and fraud" line didn't realize that if The Street took them as credible, then AAPL.O would have tanked so far that the longs and others who went "Bullish" on Apple wouldn't have been able to get out fast enough. Yes, AAPL.O could have tanked all the way back to the 19 - 21 range. Thankfully, RFI's dogged stance on the issue did a lot to calm people down. Between that and Mr. Lewis' comments in EE Times, that's all that a lot needed. As for RFI, Apple Recon's, et al, position and relations with "The Mac Internet Community & Mac Faithful," that doesn't matter. Who benefits? You do. That's our concern.
Yes, there's a lot riding on MWNY. So much so, that an earnings preannouncement is not out of the question if the last minute deals, demos, announcements, etc. don't come in time. Yes, there's a lot of last minute jockeying even though Apple is "up" about MWNY. Including the potential to announce "New Boxes" at MWNY. The "replacements" for all of those boxes that Apple is allegedly either dropping off its price list or reducing the prices on.
RFI also received "guidance" (okay, call it a whisper cum rumor) that the keynote on Wednesday is supposed to be "Hot," both for "The Street" and "The Mac Faithful." Something for everyone as it were. The Apple "Bulls" should be pleased. The "Mac Faithful" should be dazzled and pleased. And Mr. Jobs should be basking in the "dual glow" (remote, via satellite) of both professional and personal fulfillment.
RFI "knew" several weeks ago that 8 - 9 Jul 98 should be good days to be long AAPL, but there were too many fungibles, there still are, to justify rational or even irrational exuberance over AAPL.O back when we first heard it. And, the "fabrication / fraud" issue damn near sunk the entire thing. It wasn't "fabricated" and it damn near could have caused AAPL.O to tumble. Forget the iMac. That wouldn't hold it. And if Apple posted "better than expected earnings," AAPL would have had to claw its way back up. We guess they didn't think of that. And, then they'd have to "answer" for that.
But, if all goes well, then the day of the keynote should be a good day to be long AAPL. It's as simple as that. And if some of the last minute jockeying produces deals, etc., so much the better. Let's keep our fingers crossed. And if you pray.....
MacWEEK's Mac-The-Knife reported on Friday evening that they heard that Apple's Q3 profits would hit $70 million and 55¢ EPS when the earnings are reported in July. That's a bit above RFI's 38 - 42¢ EPS (diluted) "comfortable range," but we're not going to disagree with the potential. Apple could, and we stress could, post those numbers and totally blow away the Consenus Estimates of 33 - 34¢ EPS (diluted) by a margin of 61%. Now, that would be a real shocker and send the AAPL shooting past the upper end of the 28 - 32 range, if it hadn't already done so by the time the earnings are announced. And, FWIW, there's scant resistance between 32 and 42 1/2 in AAPL save for strike resistance; as well as the fact that there are no open options series that high.
On a related note, RFI also heard an unsubstantiated report that the "Microsoft Greenmail" payments from the Aug '97 deal were a major contribution, as well as another unsubstantiated report that Apple sold 3 million units in Q3. Don't use that unit number as a "benchmark," as it's unsubstantiated.
RFI prefers to stay within its "comfortable range" of the previously reported 38 - 42¢ EPS (diluted) and not raise the bar any higher. That way, we can be "suprised" if Apple hits the 55¢ EPS when it reports its earnings. We're on the "high end" of consensus, so at least we'll be on the right side of things if Apple does hit those numbers reported by MTK. God, we hope so. That will mean that AAPL.O will soar. 42 1/2 would be an "Easy Target" as long as the options market can get the series opened.
Finally? While MTK is Morgan's "Beloved Nephew," and Morgan is MTK's "Crazy Republican Uncle," Morgan had no input whatsoever into that MTK Apple Earnings mention. If Morgan did, then MTK would have used the "diluted" caveat in the report.
The Apple 07 Jul 98 price list reportedly drops some boxes while discounting others. The rumored boxes are:
Models Rumored to be discontinued effective July 7:
Rumored Price Reductions:
M6431LL/A Power Macintosh G3 (Minitower/233MHz/512K L2/32MB/4GB/24CD/56K modem) with Communications Bundle To: $1,849
M6459LL/A Power Macintosh G3 (Minitower/266MHz/512K L2/128MB/4GB-UW/3D graphics card/24CD) To: $2,999
These rumored discontinuations and price cuts all raise the questions of what will replace them? 333 MHz? 366 MHz? The first delivery of the promises made to "The Creative World" at Macworld Boston '97? Good questions all. Problem is, those "Design & Publishing / Creative World" boxes are not expected until CY Q1 '99.
Ah, what interesting times in which we live. The potential replacements will probably be some of the "Dazzle" that will make the "Mac Faithful" go "Ooooohhhh! Aaaaahhhhhh!" like they were watching the 4th of July Fireworks.
Suffice it to say that Apple's alleged actions on its price list the day before the keynote suggests that "New Boxes" will be part of the keynote news. Not just "iMac Going Golden," but other boxes too. And more than a few sources have intimated the possibility. Some have "a tear in their 'i."
Should be worth a little exuberance. That is, unless all this is.....
Nope. Not going to go there. We're supposed to be "Happy, Happy! Joy, Joy!" this week as far as Apple is concerned.
This washed in over the transom. We're not making any representations about it at all. We're just passing it along....
"OK- AMP/SET TOP/IMAC- Yes you are right. However; so is almost everyone else from a perspective. Yes, NC's just aren't selling. MSFT would KILL Apple for competing, and Disney....well, hopefully THEY will market it! (You know they cannot afford to screw up though....right? And AAPL definitely cannot! So......anyone want to finance this?) We'll see, I think we have some wealthy parties willing."
Why are we bothering to pass it along? Because the person sending that in didn't know what we were saying about the AMP/vMac/Set Top Box of late. Personally, with the fact that Microsoft will be launching a "Good Enough Multimedia Player Box," it doesn't really matter anymore. "Good Enough" will win. It's as simple as that. What could have been....
Hopefully, Mr. Jobs' "QuickTime for Windows. Think Money" will be a part of Microsoft's "Good Enough" Set Top boxes that includes "WebTV NexGen." Heck, we're already getting queries about when they can get the darn things.
The issue RFI did want to focus on last Thursday and Friday was the excellent job that Apple and Macworld did in marketing MWNY in the Greater New York area. Between the radio ads, the other ads, the tie-ins (like Mr. Pogue at J&R Computers, etc.) all made it hard not to know that Macworld was coming to New York, and there was even a heavy "prime time rotation" on 770 WABC, Talk Radio. FWIW, that "50,000 Watt Blowtorch of Free Speech" reaches a wide region. We have received it all the way down the East Coast and into the Midwest. A hell of an arc. And, the ads hit all the high number shows. In other words, "A Great Job."
Ah yes, that was all but derailed as RFI had to turn its attention to other matters. We even wanted to banner it on Apple Recon. Problem is, the "tempest" left that on the cutting room floor. People talk a lot about Apple's "poor marketing," but that was a shining example of how to do things right. Now, if only they could do that all the time....
The Indicator retreated slightly on Thursday (02 Jul 98) which issued no signal as far as the markets are concerned. In other words, the "Rally SIgnal" as well as the associated "Decline Signals" have not been negated. But, Thursday's market activity (especially vis-a-vis the Techs) was not comforting. The potential for a market decline on Monday, especially in NASDAQ, is worrisome. Another reason for RFI to "Hold Fire / Stand Down" as far as a "Full Launch" was concerned. SOX, MSH, Software, Hardware, etc. all acted terribly close to The Close and that does not portend "good" for the Techs or the General Markets.
Add in the fact that while the Sep 98 S&P 500 Futures are still showing positive momentum with a postive bias, they are also at extremely high momentum levels and are vulnerable to a reversal and a retracement of about 4% (median) below Wendesday's close.
As long as "disaster" doesn't strike though, we could see the General Markets attempt to complete the 10% Median Rally Signal that would propel the Cash S&P 500 above the 1200 level. And as long as you remember that "anything above 1144 is 'gravy," you'll be fine. "Earnings Season" will soon be upon us, but RFI suspects that the "Consensus Estimates" have been so lowered that the bar will be easy enough for most to clear. And that means that the earnings reports "Will Meet or Beat The Street." Never mind that they were much higher in March and April. It's the "Windshield Wiper Effect" in action.
There's no change in strategy, and we're not moving the intraday stops for the longs / calls for the present. We're going to continue to "Buck The Tiger" until: the Indicator issues a signal, we decide to jump off, or we're thrown off.
Hang on people. It might be a wild ride this week.
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