Interview: Coburn Ventures---Bujnowski, Dave---Technology Analyst
>> welcome back. shares of apple computer rose to a record high today following comments from chief executive steve jobs at the mac world expo. bloomberg’s bob bowdon joins me with more on today’s apple story.
>> thank you. yes, apple shares, another all-time high today, steve jobs announcing the first apple macs and notebook computers based on intel processors.
>> well, what difference is the new i-mac intel processor is two to three times faster than the i-mac. two to three times faster. [applause snfment and that is because we are building in intel’s latest and greatest technology, the new intel chip.
>> the duo chip, proprocessors. we got instant reaction from apple watchers outside san francisco’s center.
>> big news for apple. they were able to deliver well ahead of their promised spring delivery, very solid offerings in the consumer space with the i mac, and of course they managed to get the mac book updated, which has been an issue with some of their customers who have been looking for faster processing.
>> it seems they had a lot of strong products. i was particularly impressed -- there are a lot of rumors they were going to come out with intel on their mac minnesota miningny or the smaller power book. they led with the strongest projects of the intel transition, and that to me is a strong statement.
>> it doesn’t necessarily get the attention of the generic consumer market , their core market , especially the mac prousers are going to be ecstatic because the mac will run up to five times faster on the newportable.
>> jobs also delighted investors by saying last quarter sales were $5.7 billion, higher than the $5.04 billion mean analyst estimate for sales and higher than apple’s own october forecast. apple’s retail stores posted revenues of more than a billion dollars for the first time selling 14 million ipod digital music players. a piper jaffray analyst predicted 11 million would be that number. apple shares as we mentioned a new intraday and closing all-time high. back to you.
>> bob, thanks for that. joining us now from a closer look at apple is dave bujnowski, analyst at coburn ventures. coburn ventures is a technology research firm founded by a group of former u.b.s. technology analysts. so, dave, welcome.
>> thanks for having me, lori.
>> of all this good news bob reported on from steve jobs at apple today, which do you feel is the most important?
>> the products were exciting, but a lot of them were expected. the intel news was great, maybe a little bit better than expected with an earlier ramp for the intel p.c.’s. but the retail stores number is something we’ve been focusing on if months. i think it’s underappreciated by the street. and a billion dollars in retail stores for the december quarter coming off a september quarter where i think the number was $660 million, that’s just a phenomenal quarter. so, that’s the one data point that i kind of raise my eyebrows at when i saw. we’ve been expecting great things from the retail stores but that’s a huge number.
>> why do you think investors were underappreciate year to dating the retail sales business?
>> it’s easy to lose the numbers when they’re 17% of sales. it’s not that large a percent of sales and it’s easy to lose sight of them when things like the nano and the ipod steal so much of the headlines. i think most people focus on the hot product, the nano or the intel chips coming. but, you know, the retail stores, if you run some numbers -- and we can talk more about this―there’s a lot more earnings power in the retail numbers than first meets the eye.
>> isn’t that interesting. you mentioned that apple is more than a―than just a hot-product story, though they did mention 14 million ipods sold, the intel-based mac pro notebook. apple is trying to ride the waves, it seems of a being a hot product story.
>> absolutely.
>> but you’re still positive on the stock.
>> right.
>> but they’re not a one-story company.
>> the hot products are obviously really important to keep the whole business going including the retail stores. if one of the products doesn’t do well, it’s going to be reflected in the retail store numbers too. we take a the step back and say demographics are playing into apple’s hands. everyone knows the kids these days, 20-year-olds, love their gadgets. good thing for apple. they’re selling really cool, hip products. but what about the 30-somethings or 40-somethings or older who weren’t born into the digital age and they’re inherently a bit afraid of technology? what they need is someone―we call them tech cowards. apple caters to the tech coward. these people are going to feel peer pressure in the next five to 10 years to migrate to the digital world and they need someone to hold their hands. apple does this with simple and easy to use products. and the retail stores are fun to go to and are conduits for the tech cowards to migrate into the digital world. i think if you look at demographics, it can play out for five or 10 years.
>> let me ask you about apple share price, up over 6% today, is there growth here?
>> anytime you see a stock trading at 1.5 times its 200-day, i wouldn’t be building too aggressive a position. but we love it longer term. the retailers―retail stores alone, if they keep growing as, over the next two years they can generate an incremental billion dollars in income.
>> got to leave it there. thanks a lot. s
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Listen Market briefing --- Lori (slow)
Jerry York --- Greg (slow)
York's comments --- June (slow)
Nasdaq --- Robert (slow)
NYSE --- Deb (fast)
headquarters in new york city. i’m lori rothman. this is “after the bell.” shares of apple soared after the company says first-quarter sales reached $5.7 billion. speaking at the mac world expo in san francisco today, c.e.o. steve jobs said apple’s retail stores posted revenue of more than $1 billion for the first time. we’ll get reaction from dave bujnowski of coburn ventures. also coming up, the world’s second-biggest biotech company posts its fourth-quarter results in extended hours. that is genentech, gaining 70%, shares up 70% last year after studies showed that its colon cancer drug was also effective in treating lung and bransbrans -- breast cancers. we will have those numbers as they break off the bloomberg terminal lefment’s get you the settling numbers as the markets close. the nasdaq composite under strength from apple and google shares closing over one point higher, 2320. our top story today, kirk kerkorian’s top aide said general motors should cut the $1.1 billion annual dividend in half and speed up plans to lower costs.
>> time is of the essence here. you never know what’s going to happen in the economy. the foreign competitors are tough. so, they need to adopt a very urgent time is of the essence attitude and to make sure that they are galvanizing that same sense of urgency down through all levels of the organization.
>> bloomberg’s greg miles sat down with york after the speech for an exclusive interview. greg joins us now live from detroit with the details. greg.
>> lori, you’re right, jerry york gave a very pointed speech for more than an hour at a hotel here at the renaissance center, which, by the way, is where the headquarters of general motors are here. that’s a half amile from the convention center where the auto show is detroit. among other things, he said general motors must go into a crisis mode of management to fix itself. he said that the company has about three years of cash or about $25 billion, but if you have a recession, the time that cash would last might be only a year to 18 months. he said they have to cut the dividend, as you indicated, and they may have to sell two of their eight brands, and also that all employ dwrees, including the chairman of the board trkts board of directors, the c.e.o., employees, even the union must take pay cuts to take a common sacrifice in trying to turn around the company. but hi also said he’s competent that general motors can turn around if they do the right thing. and he said that rick wagoner, c.e.o. of the company, and his team is the team that can do the job even though they’ve been the target of heavy criticism. let’s listen to what jerry york had to say about rick wagoner.
>> we believe that rick wagoner is the man, but, you know, at the end of the day, that’s up to his board of directors. i would simply add to that that rick has articulated some extremely important initiatives for this company, and he deserves a very ample amount of time to make those initiatives work.
>> wagoner was given credit by york for cutting costs drastically cutting capacity, about one million units in the past year, also improving the quality of the models at the general motors recognized by many people in the general public. york also proposed what to many at g.m. would be heretical. he said the company should consider selling two of its brands, one the very popular hummer brand and also zab. let’s listen to what he had to say about saab.
>> according to all industry reports i’ve read, saab has been pretty much a consistent money loser and its scale, its mass, if you will, in the context of the worldwide auto industry, is quite small.
>> so, to sum it up, york said get moving real fast. back to you.
>> greg, thanks for that. how did the market react to york’s comments today? bloomberg’s june grasso has this angle of the story.
>> after jumping on some of york’s comments, g.m. shares ended the day lower by nearly 1.5%. there was a jump higher ot about 1:00 eastern time when york said kerkorian would be willing to buy back the 12 million shares he sold last month and maybe buy 12 million more. york also called for g.m. to cut in half annual dividend payments of over a billion dollars. kerkorian is g.m.’s fourth-largest shareholder with a nearly 8% stake in the company. giving up half of the dividend would take $121 million out of kerkorian’s -- $11 million out of the quarterly earnings of the company. analyst john novak of morningstar says york’s comments may help g.m. cut its dividends sometime in the next 12 to 18 months. but novak says you’re talking about $500 million in cash a drop in the bucket of the problems. wagoner said yesterday he expects a significant reduction in losses this year with aed revenue from new models, savings from plant closings and the elimination of 30,000 jobs. kerkorian, who has said he isn’t one to pressure the company, is giving advice after his g.m. investment has lost hundreds of millions of dollars. an analyst says kerkorian sees some opportunity in g.m. and is not willing to abandon it. >> i think he sees a product development program being put in placely mr. lutz that i think will be effective for the company going forward. secondly, i think he sees the delphi situation as well as the 2007 union negotiations as potential watershed events in the industry to start to reverse some of these pension costs.
>> g.m.’s dividend yield at 9% is the high nest the dow jones industrial average. wagoner has said in the past g.m. duds not need to cut its dividend. back to you, lori.
>> june, thank you. more on the apple stock move today. robert gray standing by in times square at the nasdaq market site. hi, robert.
>> lori, thanks. nasdaq did finish higher today, 6-6 in 2006. just barely closing a little higher today by about one point and change. volume exceeding last year’s average up just about two billion shares trading today, higher than the 1.8 billion last year. it was all about apple today. we had steve jobs giving his keynote. you can see apple where the stock began ramping up mid morning. this is an intraday chart. when steve jobs began his keynote, talking about the quarter they had, sales of $5.7 billion, topping their own october forecasts to the tune of $1 billion. and they sold 14 million ipods over the holidays exeading even the most bullish analyst estimates there. i talked to tony ursula, an analyst at loomis sales. the firm owns about six million shares of apple. he said the december quarter results really trumped any of the product announcements and the product announcements being, of course, that they had this new intel-operated mcintosh computers ready to go for the macs and they would have a notebook ready to share by next month. we saw shares of apple rising to a record. bob bowdon will have more later on. intel not really seeing a boost from this announcement today, shares falling 1.2%, though we did see their brethren in the philadelphia semiconductor index, continuing their rally in the new year. that index up .7% today. in other news, we saw cephalon shares surging 8.5% on news that broke during the day, settling a lawsuit to keep the generic version of their sleeping gel on the markets . let geese to deborah kostroun at the new york stock exchange.
>> thanks, robert. the dow jones industrial average and the s&p 500 just barally lower today. a lot of records still, though. you had the small caps, the russell 2000, the midcaps, also records in the am exbroker/dealer index and the oil services index. we saw those in yesterday’s session as well. home depot saying that it is making its biggest acquisition, agreeing to pay $3.19 billion for supply to increase sales to professional builders. home depot, the biggest gainer in the dow, paying 20% more than yesterday’s closing stock price. italy’s biggest gaming company with the largest share of the global lottery market , paying a 4.5% premium as compared with yesterday’s closing price for gtech holdings. alberto-culver, the maker of alberto vo 5, they’re going to spin off their chain of 3,200 sally beauty supply stores and sell it to regis companies for $2.6 billion. stay with us. because at 4:30 eastern time, we’ll speak with paul finkelstein, the c.e.o. of regis, and howard bernick, alberto-culver c.e.o. drugs, materials, semiconductors laggards. alcoa the biggest drag in the dow jones industrial average. back to you.
>> thank you, deborah. the ipod working magic for apple once again. just how long will the momentum last? we’ll speak with a tech analyst next.
