music videos have been on sale through Apple`s iTunes Music Store since

last week though Apple has not announced it. The music industry doesn`t

have an outlet to sell music videos and likely would cooperate with

Apple. In addition, Netflix said that given Apple`s recent hiring and

lease of space, the company has designs on subscription video of some

kind. And Apple has expressed interest in high definition video.

Concerns about what Apple does next seem premature.

I want my V-iPod. Selling videos may be a precursor to a video iPod.

The new features within iTunes allow users to download full versions of

Quicktime music videos. We previously speculated that iPod video

capability for short clips could be available by Christmas.

Apple may go Intel. The Wall Street Journal says that Apple is in talks

with Intel (this wouldn`t have been a lead story a year ago).

Historically, changing chip architectures has been very difficult and

painful. The article suggests that Apple may have already done most of

work porting OS X to Intel. What is the benefit to Apple and consumers?

One might be in notebooks, where Apple has said that heat dissipation

makes it difficult to put a G5 into a laptop. Still, we`d be surprised

to see a wholesale switchover to Intel processors with Mac momentum

finally kicking in.

Best Buy off to slow Mac mini start. Store managers told us that PC

users are reluctant to make the switch to Mac and are opting for low

cost PCs like eMachines. Some store associates said they are at a

disadvantage with Macs because Best Buys don`t carry software for Apple.

Mac mini sales appear solid at Apple stores.

We reiterate our Buy rating with a price objective of $51 per share.

The stock broke its 50-day moving average, which caused short-term

underperformance. But in a growth sector lacking growth, we think

investors will be attracted to Apple. Valuation is intriguing, in our

view, with the stock at 24X our F2006 estimate (not taking into account

cash, which offsets coming option expense).