TBIR Week In Review: Wall Street Loves The iPad, But Don't Expect It To Save Magazines

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Wall Street and media pundits alike were busy this week predicting how many iPads would fly off the shelves this weekend and the remainder of the year.  Analysts think Apple will sell anywhere from 200K to 400K iPads this weekend (this is in addition to pre-orders) and upwards of 3 million for the entire 2010.

Meanwhile, most in the media were blushing at how great the iPad is, except for The New York Times’ David Pogue, who thinks the iPad is “basically a gigantic iPod Touch.”

The AAPL shares were up over 3% this week (more than 150% annualized) so clearly investors are getting excited leading up to the iPad launch.  If the opening weekend doesn’t meet expectations expect weakness in the shares next week.

TBI Research covered all the events this week.  Here is a re-cap:

Here Is Why The iPad Won’t Save The Magazine Industry
Magazine industry advertising revenue declined an average of 12% the past 2 years (18% in 2009) so most magazines need to reverse revenue declines while managing costs or face the real prospect of going out of business if the bleeding continues. 

Some believe the iPad will enable magazines to reverse course in the near-term, but we believe these expectations are way off the mark.  In particular:

  • It’s going to be years for mobile ad revenue to become material.
  • As a result, in the near-term magazines will need to look to subscription revenue to drive incremental profits.
  • But, even if iPad sales wildly exceed expectations and users rush to purchase lots of magazine subscriptions (we don’t think they will), this will not be enough to drive meaningful revenue at most magazines.

Read The Whole Thing Here >>

Apple Investor: Analysts Going Wild Over The iPad:
Wall Street Analysts See Strong First Weekend For iPad
Apple analysts are vocal again this morning on what to expect this weekend.

  • Gene Munster at Piper Jaffray believes Apple will sell an additional 200-300K iPads this weekend bringing his total unit estimate to 2.7 million in calendar 2010. He believes this may be conservative given strong initial demand. Munster says the breakout year for the iPad will ultimately be next year (calendar 2011) with 8 million iPad units estimated to be sold. He maintains his Overweight rating and $284 price-target.
  • Mike Abramsky at RBC is increasing his iPad estimates because of strong demand (greater than that of the iPhone). He expects Apple to ship 300-400K iPads this weekend. He has increased his fiscal year 2010 estimates to $55.6 billion in revenue (30% year-over-year growth), $12.04 EPS and 2.5 million iPad units. Abramsky reiterates his Outperform rating and $275 price-target.

Google Investor: Wall Street Thinks China Weakness Creates A Buying Opportunity:
Recent Weakness Creates Buying Opportunity For GOOG Shares (paidContent)
Barclays Capital analyst Douglas Anmuth believes that weakness in Google stock (related to China, competition from Apple, seasonality) has created a buying opportunity. That said, while he believes Google will remain the default search engine on the iPad / iPhone in the short-term, the long-term picture is less clear. At this point, retaining search on the iPhone should be a priority. He reiterates his Overweight rating and $675 price-target on the stock.

New Presentation: “Brand Next – Uber-Engagement With Mobile Apps” by Noah Elkin, eMarketer
Large brands are starting to dip their toes in mobile advertising and we expect the frequency and size of buys like this to increase over the next 3-5 years as advertisers become more comfortable with the medium and publishers offer better inventory.

Senior eMarketer Analyst Noah Elkin illustrated the opportunity and provided a few examples of recent successes at the iMedia Connections Summit in Florida in March 2010.

View the entire presentation here >>

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