Apple’s (AAPL) Illogical Run

On April 25, Apple (AAPL) announced the results for its most recent quarter. The numbers were good.

During that quarter, Apple sold over 1.5 million Macs, up 36% from the same quarter a year ago. iPod sales were up 24% to over 10.5 million. The company’s shares traded just over $95 at the end of the day, right around their 52-week high.

Since earnings, Apple’s stock has gone to $115. So, in a fairly short time, and with little additional news, the shares are up 20%.

Aside from the wave of popularity that the company has with customers, there is little to justify the increase. As a matter of fact, Apple said it would have to delay its new Leopard operating system until the Fall because programmers were working to get out the new iPhone.

Apple’s shares appear to be rising in anticipation of the iPhone launch in late June. But, the market has known about the iPhone for some time. Given that, there may be more risk in the stock, at least short term, than there is upside.

Investment bank Piper Jaffray recently opined that iPod sales could be light in the current quarter, coming in at 9.5 million and not he 9.8 million that Wall St. expects. If that happens, it could put downward pressure on the stock. On the other side of the debate, Prudential Securities sees Mac sales coming in fairly strong.

Apple and its iPhone launch parter, AT&T (T), should not assume that the rest of the cellphone industry is standing around flat-footed waiting to be beaten to a pulp by the new handset.Competitors have know about the new product for a long time, perhps too long. Verizon (VZ) is launching its own product with LG’s new product, the Prada. It is probably safe to assume that other US cell providers, especially Sprint (S) and T-Mobile also have plans.

Apple is also up against the world’s two largest handset companies, Motorola (MOT) and Nokia (NOK). Any substantial success for the Apple product threatens their franchises, especially at the high end of the market. Wall St. can assume with almost 100% certainty that both companies have several handsets in the works to go head-to-head with the new product.

In the personal computer industry, companies like Hewlett-Packard (HPQ) and Dell (DELL) can hardly afford to see the Mac take more more market share. Both companies are likely to be aggressive on pricing and features to keep PC users firmly in the PC camp. Dell’s launch of a retail channel with Wal-Mart (WMT) is likely to be followed-up with deals putting its products into other major chains.

Each of these developments leaves Apple in a position where it needs three home runs to keep its stock price high, a successful iPhone launch and growing sales for both the Mac and iPhone.

That is a lot of long balls.

Douglas A. McIntyre