Apple Anecdote

Probably the last thing you want to read first thing today is another story on Apple (AAPL). Tough luck. If you do not quite understand the revolutionary nature of the Apple phenomenon, then I strongly suggest you take a trip to the Apple Store right next to FAO Schwartz in front of the old General Motors (GM) building on Fifty-Ninth Street and Fifth Avenue in Manhattan. I was in NYC last evening and took two clients from Mexico City to the Apple Store around 6 p.m. EDT. The scene at the store was jaw-dropping and nearly biblical in proportion.

You would think that it was the last shopping day before Christmas and the store was going to close in an hour. Fortunately, for Apple and its shareholders, that was not the case. It was 6 p.m. EDT on a Monday in October, for crying out loud. The store was wall-to-wall people. The checkout line was, by my count, at least 50 people long. To combat the long checkout line, the employees wheeled out a cart with the new touchscreen iPods and sold them from the cart with a wireless credit card reader. There was a line at the cart and employees were walking out of the stock room with new iPods stacked high in their arms as they balanced them on the walk to the cart.

While there were a few middle- and senior-aged shoppers in the store, an overwhelming preponderance of the shoppers were below 30. This weekend, my 14-year-old daughter was vociferous in her demands to buy a new video iPod, despite her existing iPod working in perfect condition. I did not fall for that sob story. Apple has captured the next generation of technology users in a very short period of time. Unless the company does something along the lines of what GM did -- see, I had to tie in GM - and loses an entire generation of users, then Apple has many years of growth in its future.

Last week, I was at the Apple Store at the Short Hills Mall, again around 6 p.m. EDT. The store has been under renovation for several weeks. The store is quite large when in full operation, but currently, the store is reduced to a temporary space of about 12 feet by 50 feet, by my estimate. Has that deterred sales and shoppers? Not a chance. There were plenty of shoppers and an ample amount of purchasers waiting on line to pay for their products.

The Apple story is not a one-hit wonder. This is a company that is transitioning the way in which we think and act when it comes to entertainment, information, communication and personal computing. This is the prima facie evidence of Cody Willard's empowerment revolution front and center.

When you add Apple's first-half 2007 results to its second-half 2007 estimates, full-year 2007 EPS is expected to be $4.00. I currently see 2008 EPS consensus at $4.52. That implies a 13% growth rate in 2008. No way, no how. Those estimates are coming up to somewhere in the $4.75 to $5.00 range. By the end of this year, I estimate that the company will have between $17 and $18 per share in cash, which will only account for about 30 cents in after-tax earnings in 2008. No wonder analysts are raising their price targets on Apple.