Top Ten Foolish Ideas for Apple
March 29th, 1999

Ah, yes, April Fool's Day, my favorite day of the year. After all, as a financial writer I see April Fool's Day as a memorial to the whole profession. In celebration I thought I'd make a top ten list of the most foolish things I've heard or cribbed from the Internet, or invented myself about Apple Computer, Inc. Be forewarned; they're not all funny and some are more serious than you might like to believe.

  1. Suggestion: Apple should buy CompUSA! Stupid idea, maybe, but it sure is a possibility. Due to Khrushchev-era management skills, CompUSA has witnessed its stock price plummet to below 6 bucks a share. That gives CompUSA a market capitalization of about $537 million well within Apple's purchasing power. Buying CompUSA would give Apple 217 retail outlets across the country. Quite a presence. Of course as one poster suggests at techstock.com, Apple would "…continue to stock PC gear but it will take up no more than 5% of the floor space and the software aisles will always be blocked by stock ladders".
  2. Suggestion: Disney should buy Apple and Michael Eisner should step down and let Steve Jobs take the helm. Gil Amelio predicts this in his book when he warns Hollywood to watch out for Steve. It's not as far-fetched of a scenario as one might think. Eisner is getting old and wants to retire. He has not groomed an heir apparent and he likes Steve's shake-em-up style. Jobs only owns one share of Apple stock so a buy out of Apple would only make sense to Steve if he were offered the top position at Disney. An even better scenario is that Disney buys out Pixar and Apple together.

    Why would Disney want to own Apple? The imaginable synergies are for a techno-entertainment company of the likes the world has never seen. Disney is a vast content provider with a name the world trusts like mother's milk. Apple as a technology house could provide Disney's content with a launching pad into the new mediums that are evolving from the silicon revolution. Imagine multi-user, interactive media based on famous story lines from the archives at Disney. It would be like Ultima Online meets Snow White and the Seven Dwarfs. Uh, on second thought that might not be a pretty sight. But you get the idea.

  3. Prediction: Aaron Goldberg, a stock analyst with a long-standing beef against Apple, will once again predict that iMac sales are slowing down this quarter and accuse Apple of channel stuffing. He's already done so twice, once in June of 1998 and again November. When proven wrong, again, and publicly humiliated, he will be vaporized by the mothership and an exact Aaron Goldberg replica with a new maintenance upgrade will be substituted in his place. No one notices.
  4. Prediction: Apple spins off QuickTime as an Internet IPO play offered at $12 a share. Apple could retain the controlling interest. First day of public trading QT soars to $120 a share. Think that's impossible? You should know better by now. Look no further than Real Networks (RNWK) to see what the foolish public thinks about real time Internet multimedia. (cribbed from Soup on techstock.com)
  5. Suggestion: Sony should buy Apple if Disney doesn't. There is a new paradigm evolving around the idea of "information appliances" as the PC market becomes more commodified. The PC box making business is entering the end-game stage. Even IBM is ready to throw in the towel as the competition has overheated and margins are falling to zilch on the sub-$1,000 PCs.

    Sony is one of the major leaders in a gaggle of giant multi-national electronics firms that would like to see Redmond look like an Ohio steel-mill company town by the middle of next century. Some analysts are placing Sony at the "Golden Convergence Ground Zero", a magical space where the Internet, cable, interactive content and entertainment appliances merge into a powerful money tree for decades to come.

    The hardware lynchpin for Sony's vision is the IEEE1394 standard. Sony calls it i.LINK. It allows "peer to peer" data transfers so that devices can speak to each other without a PC moderator. This paves the way for a whole range of unimaginable "smart" appliances networked without any help from Microsoft. Apple, as a co-conspirator with Sony on the IEEE 1394, has a number of proprietary technologies, such as QuickTime or OSX, that Sony might need to dominate the emerging information appliance market space.

    Also, Sony's visions of the future are based on the RISC coprocessor designs of IBM and Motorola rather than Intel's Pentium house of cards. Apple is years ahead of everyone in coding for this type of silicon.

  6. Suggestion: Open an online store for Canadians! Did you know that if you live in Canada that you couldn't buy Apple products from the online Apple Store? Did you know that Apple has for more than a year now said that they were going to open a Canadian online store but have not followed through? What's up Apple?
  7. Suggestion: OK, enough with the "Think Different" ads. Apple should consider a "for the rest of us" ad campaign as opposed to its recent efforts to sell computers to all the Gandis and Picassos of the world. Perhaps the "genius" market (.001 of the general population) is a bit too small to sustain quarter over quarter growth. For example, I already own several Macs.

    How about giant ads showing Joe in his small engine repair shop keeping the books on a Mac. Or Fred the sixth Grade math teacher using iMacs in the classroom. Or Penny the secretary using the speech recognition capabilities of her P1 to take dictation.

  8. Suggestion: Speaking of keeping the books, kick that jerk Bill Campbell off the Apple Board of Directors. Mr. Campbell is the CEO of Intuit, the company that makes QuickBooks and Quicken. As you might know Intuit has for a few years now been step by step pulling back its support for Macintosh platform. QuickBooks even has a fierce y2k bug that crashes your Mac hard. Intuit has been dragging its feet on a fix for this problem and only recently has introduced an awkward patch that reduced some of the functionality of QuickBooks. They could have just used the Mac's internal clock that has no y2k problem but didn't. http://www.mactimes.com/bin/news/index.pl?read=1031

    If this guy's own company is so Mac unaware and unfriendly, what is he doing on the Board of Directors of Apple? What a shame that Apple feels it's necessary to kiss up to a wimpy little one-product software company by pampering the boss with honors and alocades he hardly deserves.

  9. Prediction: Apple has a P/E ratio of only 16. This in itself is hilarious. Apple is the laughing stock of the industry. Laughing all the way to the bank that is. Dell's P/E is 73.

    I predict that someday, perhaps towards the end of the year, investors will be looking for value play in which to stash some of those profits they'll be taking from a number of astronomically overvalued corporations. Apple, with future profitable quarters stretched out as far as one can see and a product line that according to Larry Ellison will make "you want them like a teenage boy wants a cool-looking fast car", is becoming the ultimate low risk value investment.

    In fact, it easy to imagine Apple with a P/E ratio twice of what it is today and that would put the stock price close to 70 dollars a share. As the Motley Fool put it back in January, "A long term investor might see a company with a consumer-oriented brand and proprietary technology, a company that's regaining market share and delivering operational efficiencies that are tops in its industry. Such a company ought to trade at a premium both to the market and to its own growth rate."

  10. Perspective: As you know Apple has opened the bottom half of the source code for OSX server. It's mostly old Unix hacks already in the public domain, but, hey, it's in the right spirit, no? In fact, since March 17, more than 16,000 developers have registered with Apple for the open source code.

Your comments are welcomed.