Thursday, March 15, 2007

Calls of Note Part 1

- Piper Jaffray notes there is talk on the Street that Apple (NASDAQ:AAPL) is planning an event for April 15 at the NAB tradeshow. At last year's NAB, expectations were that Apple would announce a high end version of Final Cut, but this did not materialize. Firm believes that there is a >50% chance that if Apple holds a special event at NAB, it will be the venue for this announcement. While still only a rumored special event, investors will likely be somewhat concerned about what Apple has up its sleeve as we get closer to NAB. Piper maintains their Outperform rating on Avid Tech (NASDAQ:AVID), given shares are already trading at a discounted multiple (18x CY07E EPS vs. comps at 24x) and does not believe a higher end version of Apple's Final Cut would end up significantly impacting Avid's pro post production business (Avid pro post production is 15%-20% of revenue).

If Apple announces a higher end version of Final Cut, it is likely to have at least one advantage over Avid: price. Any high end Apple editing package is likely to be priced lower than an Avid system (such as Adrenaline). THey believe, however, that Avid's pro customers are less sensitive to price and more sensitive to brand and familiarity. The Avid story is clearly not squeaky clean, but the firm believes it is getting closer to becoming a stable growing business again.

Notablecalls: Interesting comments by Piper's Gene Munster. Not actionable but good to know category. Should AAPL unveil the Final Cut, there would likely be a knee-jerk reaction in AVID's stock. But that's about it.

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