MY FAVOURITE SHARE

WINDOW BOXES GOOD, A STOCK OF APPLE'S BEST ...

WHEN I left college, my ongoing rant went something along the lines of, "Damned computers! They'll never replace the creativity of the human spirit!" Of course in those days, we only had one word-processing thingamajig in the office and we kept it locked away in a room by itself because everyone except the PA was afraid of it. Now, if we have an electrical failure, I might as well go home, because without my computer I am paralysed. And my computer is a Mac.

Call me a whimsical old fool, but I just love Apple (AAPL, Nasdaq). Yes, its machines have always been regarded as droll anachronisms. Yes, they are consistently more expensive than Windows boxes. Yes, it still doesn't seem to be able to supply adequate quantities of Macs - but there it is still ticking away at 3-5 per cent global share and generating very nice returns for shareholders.

The stock's climb in the last 18-24 months has been impressive, especially when one considers the state of the IT sector, and seems to be based more around its magnificent iPod/iTunes business rather than its core hardware. But I for one am still delighted to see the combination of trailblazing, user affability and exquisite design sense being rewarded in the market.

I don't suppose world domination awaits the folks in Cupertino anytime soon, but Apple is a firm that engenders loyalty (fanaticism?) among its users and those die-hards have ensured Apple's survival through the tempestuous Nineties and its revival since the launch of the iBrands (iMac, iPod, iTunes, iLife, etc) under Steve Jobs.

Steady growth from a $12 per share base in Q1 2003 to its current level in the mid-50s has made many a long-suffering Apple shareholder very happy and the fact that the company has traded profitably and continues to produce a healthy EPS does not hurt either.

I suspect that there are a number of factors that will continue to ensure a healthy return over the next while. First, the new consumer iMacs are well priced and are absolutely gorgeous. They have generated many many column inches and if Apple can ensure continuity of supply for IBM's G5 chips, they should have a nice Christmas and a solid new year.

Second, the roll-out of the iTunes music store across Europe and its integration with Windows XP computers will continue to generate lots of noise (although I suspect probably not much margin) and the ever-improving iPod will remain a sought-after item for some time to come.

Third, and this is the slow-burner, Apple's Operating System is robust and remains a much lower priority for virus writers and pimply hackers than Windows.

Apple's switch-marketing efforts have fallen on predominantly deaf ears over the years but the combination of security, cross-platform transparency, and overall stability in their Operating System may just start making the right noises in boardrooms, if it can cook up an acceptable corporate pricing structure. In a multi-user environment, the outlay on security and upgrading for the interminable patches and updates on Windows is enormous. If Apple either produces a version of OS X that can run on Intel chips or get serious about marketing to the large corporates again, it may finally see some uplift in market share. Then again, maybe it is fond of its Hermès-like air of "not for the masses".

Rowan Manahan is MD of Fortify Services and author of the career management book Where's My Oasis?

original article here