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Apple's 22 percent stock run-up follows push for new products

By Peter J. Brennan
Bloomberg News

	AP The iPod mini is smaller, sleeker and more portable than the original iPod from Apple Computer. The mini sells for $249, comes in five colors and has enough memory to hold 1,000 songs.
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"We sell iPod minis like crazy, and it's been a wonderful hit for us," said Travis Fears, a floor manager at the store. "We have been thrilled so far."

Shares of Cupertino, Calif.-based Apple have risen to their highest since September 2000 as investors bet the business-card-sized iPod mini, released last month, will boost profit. The gains may help vindicate Chief Executive Officer Steve Jobs' push to stimulate sales with new products. Last year, Apple unveiled a fast desktop computer, a laptop with an extra-wide screen, and iTunes, an online music store.

"The iPod is a success beyond anyone's wildest expectations," said Jim Grossman at Minneapolis-based Thrivent Financial for Lutherans, which owns Apple shares. "It is driving store traffic and convincing people to consider that Apple does have great products."

Apple's stock had increased in 10 of the past 12 trading days before yesterday and as of Wednesday was the best performer in the Standard & Poor's 500 index this month. The shares dropped 53 cents to $27.15 yesterday.

The rise in Apple's shares brings the company's market value to $10.1 billion. The stock trades at almost 60 times per-share earnings for this year, compared with 15 times for Hewlett-Packard and 26 times for Dell.

The iPod mini sells for $249, comes in five colors and has enough memory to hold 1,000 songs. Regular iPods sell for $299 to $499. The iPod's success may hurt Dell and help Hewlett-Packard. Dell sells a competing music player, and Hewlett-Packard Chief Executive Officer Carly Fiorina struck a deal with Jobs on Jan. 7 to let Hewlett-Packard sell a version of the iPod.

Apple shares tumbled 52 percent on Sept. 29, 2000, after the computer maker said profit would miss analysts' forecasts.

Jobs responded with products such as the original iPod, which made its debut in October 2001. Apple has sold more than 2 million of the players, the company said in January. Sales of the music player more than doubled to $345 million in fiscal 2003.

The company shipped 939,000 iPod players in the period, about two-and-a-half times the number in fiscal 2002. Apple attributed its 57 percent jump in sales of peripherals and other hardware in 2003 "primarily" to consumer demand for the iPod.

"Apple is able to go out and invest money in new technologies like the iPod and online music, which may have lit a fire under the shares," said John Buckingham, president of Al Frank Asset Management of Laguna Beach, Calif., which manages $500 million and owns 115,000 shares of Apple. "The market is finally recognizing the value inherent in the company."
 
Apple's net income will more than double to $175.4 million this year as revenue climbs 21 percent to $7.51 billion, according to an average of forecasts by analysts in Thomson Financial surveys.

Separately, Apple revealed that Jobs received no bonus for the fiscal year that ended in September, and his salary for the year remained unchanged at $1, according to a proxy filed yesterday with the Securities and Exchange Commission.

In 2002, Jobs received a bonus of $2.3 million.

Last March, Jobs did receive 5 million restricted shares, valued then at nearly $75 million, after canceling all of his stock options. No stock options were granted to Jobs in 2003.

Based on yesterday's closing price of $27.15, the stock grant is valued at about $135.8 million.

Material from Dow Jones Newswires is used in this report.

Copyright © 2004 The Seattle Times Company