Justifying an All-Time High Stock Price

Peter Burrows

Apple's stock hit an all-time high today, thanks mostly, it seems to a Bear Stearns analyst report that suggested the company will sell 14 million iPods in the December quarter. For those of you keeping track, that's roughly half the total number of iPods sold since the iPod first hit the market in 2001. Big, big number.

Now, I'm not so sure that will happen. A lot will depend on whether Apple can fill all the runaway demand. But to me, there's another reason for bullishness--at least if AppleInsider was right in a story a few days ago, that predicted Apple would unveil Intel-based Macs at Macworld on Jan. 9. That would be good for Apple's bottom line, since it would all but eliminate any chance of a drop-off in sales as people delayed purchases until mid-year, which is when Apple has said it expects to begin rolling out the Intel-based models.

Far more important is what such an early deliver would say about the state of the Intel-Apple partnership. Apple is a company that has had its problems partnering in the past; given the lame reception for its ROKR phone, it's safe to put its current work with Motorola in that category. But if Jobs & Co. are getting along with the folks at Intel, then Apple could truly start to make a truly big splash. For years, Intel has been looking for a PC maker that could help it define stand-out products, to breath life into an all-too-gray PC landscape. Instead, most PC makers focused on slashing costs rather than on innovating, to try to keep pace with more efficient Dell.

Indeed, it looks to me like Apple and Intel's interests are very much aligned these days. No doubt, IBM was a fine processor partner for Apple, while it lasted. But success in the PC business wasn't tops on IBM's list; it is Job Numero Uno for Intel--especially now, with AMD breathing down its neck. And if this partnership turns into a beautiful marriage, it could put serious pressure on other PC makers, and fast. Even if Intel innovations created with Apple's help ultimately were made available to other PC makers, Apple would have a big heads-start--and it's got the marketing savvy to make the most of that.

Of course, all this is a big if. We'll have to wait for January to know for sure. But in the meantime, if you've got any ideas for what products the two companies could, or should, produce, let us know.

Before it's here, it's on the Bloomberg Terminal.