AAPL Shares Hit All-Time High…Again
Shares of AAPL hit another all-time high last week, closing Friday’s trading session up $4.25 to $230.90 (19.8x estimated fiscal-year 2010 EPS and 18.2x Enterprise Value / Trailing Twelve Months Free Cash Flow). Upcoming catalysts include the launch of the iPad next week; analyst previews of the March quarter (likely raising earnings estimates); March NPD data on Mac unit sales; and the launch of the next generation iPhone this summer.
Morgan Stanley Thinks Strong iPad Sales Will Lead To EPS Increases
A report out this morning by Morgan Stanley analyst Katy Huberty at Morgan Stanley states that iPad build plans are stronger than expected, which could lead to significant EPS upside in coming quarters if sales subsequently follow. She estimates that 6 million iPad units will ship this year versus consensus of only 3 – 4 million. According to her analysis, for every incremental 1 million iPads sold, it adds roughly $0.25 to the bottom line.
Apple Likely Struggling To Keep Up With iPad Demand
Prior to Saturday, if you pre-ordered an iPad you would receive it on April 3. Today if you pre-order, you will not be able to pick up the gadget until April 12. Apple has also stopped the iPad reservation program. Jay Yarow at Business Insider points out that while the cause of the delay is unclear, it suggests either “Apple has a monster hit on its hands or it doesn’t know how to manage its supply chain.”
iPad Competitors Pounce On Shortcomings
The iPad isn’t without it’s shortcomings. Many competitors are capitalising on Apple’s lack of support for Adobe Flash as well as missing hardware features, such as a camera. In addition, Apple faces a threat from device-portable operating systems such as Windows 7 (Microsoft) as well as Android (Google). Finally, many competitors, like Acer, can undercut Apple’s premium pricing to go after the lower-end of the market. That said, because of it’s high-end market position, Apple could still crush the competition on operating margin like it does in the PC industry.
One Quarter Of People Ages 18-34 Want An iPad
(The NPD Group)
An NPD Group report on iPad demand found that “27% of 18-34 year-olds and 24% of Apple owners said they were extremely or very interested” in purchasing the newest Apple product. Impressive given it hasn’t even hit the shelves yet, but the findings could explain reports of supply shortages. That said, Jeff Bertolucci at PC World likens the iPad to a giant remote control; a perfect fit for your grandmother. “As a device that bridges the gap between smartphone and laptop, the iPad may be the ideal personal computer for technophobic seniors.”
Apple To Unveil Ad Platform?
Google and Apple’s newest battlefield: mobile ads. According to MediaPost, Apple is preparing to announce iAd, a mobile advertising system that Steve Jobs calls “revolutionary” and “our next big thing.” It’s the company’s attempt to woo the Madison Avenue publishing crowd and generate advertising revenue from the iPhone and iPad platforms. This makes sense given the company’s acquisition of mobile ad network Quattro. However, mobile advertising revenue is likely years from becoming material so Apple and its magazine partners shouldn’t expect a windfall just yet (we’re still highly sceptical the iPad will save magazines anyway).
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