Mr. Bachman continued: “On the whole, we believe this is a net positive … as the transition will allow it to provide improved performance, better heat and power management and lower price points, especially for mobile platforms. Further, we have always believed that Appleis value has rested with its software development (for its OS and applications), rather than the hardware.”
Finally, he said: “There is some risk due to the process of compiling applications to the new architecture (as well as risk of increasing R&D to support 2 architectures – no confirmation as of yet), but Apple has a solid transition plan and has been planning ahead. Developers we spoke with are both nervous and excited. They indicated that transitioning to Intel will likely provide lower price points, and therefore provide a larger target audience. Some concerns from developers rest upon maintaining binary compatibility, though most felt it would be manageable.”
Mr. Bachman maintained his “Buy” rating on the stock, with a 12-month target price of US$44. Regarding the impact of Appleis move on IBM, he said that “there will be minimal impact to revenue (and possibly none at all depending on the ramp-up of microprocessors for the gaming industry), and may be a risk of a few pennies to 2006 EPS of $5.30. We reiterate our Buy on IBM and price target of $84.00.”
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