Monday, May 23, 2005

Ate the Apple; Left the Core

The big buzz today was about Apple (AAPL) and the possibility that it would be using Intel's chips in place of those provided by IBM. This sparked a substantial rally in the market, and specifically caused AAPL to surge.

I dumped my Apple shares today as a direct result of this surge near the close of the day at 39.78... can't complain about a fairly quick 15% profit. I see this sudden surge as a windfall, since it is a move based purely on a rumor and speculation. I agree that if Apple were to use Intel's chips, this would be a huge positive. Surely, they'd lose some of the most hardcore Mac users, but the Mac price point would decrease enough to make it a clear contender against most x86 boxes. But, if this rumor is found to be nothing more than rumor, then I would suspect that AAPL would give back a good portion of the gains resulting from this specific rumor.

Transforming and porting Apple's OS to work with a different chip architecture would be an incredibly large undertaking. It's just not as easy as flipping a switch, and so the fruits would not be realized for some time to come if an Intel-Apple agreement were to be hammered out.

If AAPL pulls back to its pre-Intel rumor level, I will likely re-enter the position. Also interesting to note is that IBM did not pull back at all on this news. It is widely accepted that losing Apple's business would be viewed quite negatively. I will continue to follow Apple's stock, and I will keep this blog up-to-date.

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