Is The Media Trying To Kill the iPhone? (AAPL, T, RIMM, PALM)

Apple (AAPL) has no doubt been a boon for Apple shareholders.  All you have to do is go back to the start of the year when this was just a rumor and look at the January 3 price of $83.80.  Shares are up almost 50% now.

People have been critical of the touch screen and critical that more testing results have not been released.  There are also deemed a limited number of outside apps that can be bought for it on the launch, and of course there are all of the technophiles calling for consumers to wait for the second release when it is cheaper with more bells and whistles and fewer bugs that are to be anticipated.  The 100% dedication to AT&T (T-NYSE) wireless as the exclusive carrier for 5-years has also been under fire, as many will either choose not to switch carriers or won’t be able to switch carriers.

As far as the AAPL as a stock, history would tell you that there should be a ‘sell the news’ reaction right before the actual launch date next Friday.  With the performance that could easily be expected.  But that is the trading mentality rather than the long-term mentality.  What is expected is that there will be more than 1 million buyers in a very short period of time.  Some think this could even reach 10 million units in the relatively near future, and there are too many estimates of varying degrees to comment for two and three years out.  This has a shot at ending up as a huge revenue source for the company over the coming years that has only started to be factored in to Wall Street research revenue models beyond 2008.

This is getting more coverage than almost any product launch in recent history.  Of late the coverage has seemed to be a bit more skeptical, but you always have to wonder if the media has a vested interest in being negative.  After all, AT&T is the exclusive wireless carrier and there are many other wireless carriers that spend ad monies all around.  This isn’t a belief of a conspiracy or anything like that, but it is hard to not notice how the coverage went from hope, to hype, to caution.  It is easy to find the super-positive media coverage too, so don’t assume this is a one-sided event.

Research-in-Motion (RIMM-NASDAQ) have already been juicing up its advertising as the iPhone alternative, and personally I have been more than happy with my Palm (PALM-NASDAQ) Treo.  But there are millions of enthusiasts and loyalists out there that are going to be gunning for the iPhone regardless of what the media says.  On Google News alone, it looks like there are more than 700 news stories for today that show up under an "iPhone" search.

Apple (AAPL) has seen its earnings estimates ratchet higher and higher over the last 90 days, and there is still more of a "buy rating" bias on Wall Street with some of the newer analyst raised target prices being shown as $150.00 and higher.  There is a reason Steve Jobs was named as OUR most entrenched corporate leader, and on a longer-term basis he’s managed to outperform the skeptics.  There’s no real reason to think this time will be much different.

Jon C. Ogg
June 22, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.