Apple Shares Touch $600 Before Falling Back to Less Lofty Levels

SUSIE GHARIB: It’s now seven straight up days for the Dow, the first time
the blue chip index has had such a winning streak in more than a year. A
bigger-than-expected drop in jobless claims helped spread good cheer on
Wall Street today. The Labor Department said new claims fell by 14,000
last week to 351,000.

The Dow added 53 points to close at 13,253. That’s its highest level
since December of 2007. The NASDAQ is still above 3,000, gaining almost 16
points. And the S&P 500 topped 1,400 for the first time in nearly four
years.

Well, the NASDAQ and S&P got no help today from Apple (NASDAQ:AAPL),
although the stock did trade above $600 a share for the first time today.
But by the end of trading, Apple (NASDAQ:AAPL) lost $4 to close at $585 a
share. Now Apple (NASDAQ:AAPL) stock crossed the $500 mark for the first
time on February 13th, and has surged 45 percent this year.

The latest rally comes as the company’s new iPad goes on sale
tomorrow, and fans are already lining up to buy them. Joining us now to
talk more about Apple’s future, Joe Magyer. He is equities analyst at The
Motley Fool.

Hi, Joe.

JOE MAGYER, ANALYST, THE MOTLEY FOOL: Hi, Susie.

GHARIB: Well, this momentum on Apple (NASDAQ:AAPL) stock has been
just amazing. And, you know, investors just can’t seem to get enough of
it. And I know are you not as enthusiastic as most investors. Tell us
why.

MAGYER: Right, well, I love Apple (NASDAQ:AAPL) products, so do
consumers. But I don’t love the stock. And part of the reason is that
everyone loves the stock right now. Its market cap is equal to Microsoft
(NASDAQ:MSFT) plus IBM. And only two out of 57 analysts who follow it rate
it a sell. And usually when everyone can agree on the stock market that something
is a sure thing, that’s usually when the total opposite happens. So I
still think Apple (NASDAQ:AAPL) has a lot going for it and the new iPad is
going to be a huge hit, I just think investors might be getting a little
ahead of them themselves.

GHARIB: But, you know, we heard that so many times, so many experts
have come on and said Apple (NASDAQ:AAPL) stock is so overpriced.

MAGYER: It’s true.

GHARIB: And if you really listened to them, investors would have
missed out on the nice upside rise. What do you say to that?

MAGYER: Well, I would say, we said similar things in 1999 about tech
stocks all the way up. I mean, right now we are all saying that these guys
just can’t do anything wrong. And that’s ultimately the point where
usually something does go wrong.

GHARIB: Let’s talk a little bit about the new iPad. The early
reviews have been pretty fantastic. I mean, to what extent do you think
that sales of the new iPad will propel Apple (NASDAQ:AAPL) stock and sales?

MAGYER: Well, I think it’s already baked a lot into the stock price.
But I do think it’s going to be really big for Apple (NASDAQ:AAPL). The
big challenge is getting people who already have iPads to upgrade.

Unlike the iPhone, where you have a refresh cycle of, say, every two
years with your phone carrier, you have to pay full price for an iPad. And
they are not low ticket items. They are really expensive.

So making the jump from iPad 2 to the new iPad is a pretty expensive
proposition. Now that said, I think they are going to sell a ton of them.
And their tablet, the iPad, is so far out in front, not just in terms of
cost but in quality and the overall value that you get, than all their
rivals.

So I do think the iPad is going to be the clear winner for tablets for
the next couple of years at least.

GHARIB: And the more that Apple (NASDAQ:AAPL) does these sales and
piles up more cash, investors are counting on a dividend from Apple
(NASDAQ:AAPL). When do you think CEO Tim Cook will finally go for that?

MAGYER: I think next quarter, probably about a month from now, when
you get the next batch of results. Tim Cook is getting a lot of pressure.
And the reality is they just can’t invest that much money. They have $100
billion worth of cash. They don’t want to make a big splashy acquisition
and there is no reason to sit on it with interest rates this low.

So I think the smartest thing they can do is just get some of that
cash back to shareholders and they would be very happy.

GHARIB: All right. Good stuff, Joe. Any disclosures to make? Do
you own the stock?

MAGYER: I do not.

GHARIB: OK. Thanks so much, Joe, we appreciate it.

MAGYER: Thank you.

GHARIB: We’ve been speaking with Joe Magyer of The Motley Fool.


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