Following the breaking news of Apple's 67 percent growth, UBS Investment Research is predicting big things for Apple in 2008.
UBS is counting on the so-called "halo-effect" to continue to drive Apple's sales. The "halo-effect", now in "halo 2," started with "halo 1" which referred to the increase in Apple's PC sales following the wild success of the early iPod. Now after the release of the iPhone, Apple has entered into "halo 2" mode, where its iPhone and its iPod are driving each other's sales and driving sales of Apple computers.
UBS cited these effects as a major reason for Apple's torrid last quarter. UBS analyst Ben Reitzes raised the outlook on Apple's stock to a hot $220. Ben elaborates:
We continue to believe Apple is in the process of creating another version of the 'multiplier effect,' which we call 'Halo 2'. Apple’s fiscal 4Q results show that the build up to the launch of the iPhone and its ongoing excitement is driving sales of accessories, boosting retail traffic, and helping drive sales of iPods and especially Macs. As a result, we believe shares can continue to move higher into Macworld [Expo] in January.
Apple's success in its fourth quarter was chronicled at DailyTech. It included PC sales jumping 10 percent over predictions, making Apple currently the third largest home PC maker behind Dell and Compaq. iPhone sales was also high despite less than flattering media coverage of various developments with Apple.
The only slightly disappointing fact for Apple was while their iPods sold well, they were slightly below the last quarter's sales. UBS feels this only a temporary thing and is predicting strong iPod sales over the holiday season, driven by the new iPod lineup.
UBS cites that other factors which will drive strong holiday sales included the new Mac OS X Leopard, the recently updated iMac, and European iPhone.
UBS also speculated at some new possibilities that may be coming from Apple: an ultraportable device, similar to the old Apple Newton; gaming initiatives to bring gaming to Macs; and an iTunes video rental service.
Still more significantly, UBS believes Apple will release a significant expansion to the iPhone in the next few months and that the iPhone will see a springtime refresh.
If true this would keep the "halo-effect" going strong. While UBS refused to provide any specific details, it did say this, "We expect Apple to make an announcement on additional international iPhone carriers in the coming months, and our contacts in the supply chain point toward a new iPhone model to be released by March."