The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
Photo: Dan Frommer, Business Insider
AAPL Up Slightly With Broader Market
Stocks opened higher this morning after J.P. Morgan Chase’s earnings beat expectations and spurred bets that other banks’ results will be strong. Shares of AAPL are up marginally, and less than the rest of the tech sector. Upcoming catalysts for the stock include results of its second fiscal quarter on Wednesday, April 20 at 5:00 p.m ET; any update regarding Steve Jobs‘ healthy return; the WWDC starting June 6; monthly NPD data to gauge Mac / iPod businesses; iPad 2 sales updates; iPhone sales updates, the push in China, as well as the launch of the iPhone 5 (whenever that may be); new revenue streams such as video, books / publishing and social (Ping); moving iTunes into the cloud; and the continued evolution and adoption of Apple TV. Shares of Apple trade at 13x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).CDMA iPhone Growth To Maintain Apple Above Market Growth For Next Two Years (AppleInsider)
Apple’s opportunity with the CDMA iPhone is built on more than Verizon, according to J.P. Morgan analyst Mark Moskowitz. In 2012, Apple should garner $6 billion in the U.S. and half that in markets such as China, India and Japan, creating a “multi-billion dollar revenue opportunity” capable of keeping the company at above-market growth for at least the next two years. In the overseas CDMA market, the analyst projects 10% market share, or $3 billion.
Don’t Be Fooled, Apple Printed An Incredible Quarter (Boy Genius Report)
RBC Capital Markets analyst Mike Abramsky reiterated his thesis that Apple will record an impressive fiscal second quarter, or 78% year-over-year growth and above Wall Street’s consensus of $23 billion. Abramsky forecasts sales of 7 million iPads and 17 million iPhones during the quarter. That iPhone number would best holiday sales of 16.2 million.
Guidance, However, Might Be Weak (Business Insider)
Analysts at Barclays and Goldman Sachs have notes out this morning predicting “conservative” guidance from Apple when it reports earnings next week. Apple always provides low guidance, making it easier to “beat” expectations, but in this case the earthquake in Japan could have a real impact on margins and sales.
iPhone 5 Speculation Continues, Debut Could Be Fall Music Event (All Things Digital)
Apple could reveal the iPhone 5 this fall at the event it traditionally uses for music and iPod releases. The iPod isn’t exactly the most thrilling product in the lineup any more, so it makes sense for Apple to switch things up. Based on conversations with a key component supplier, Avian Securities claims the iPhone 5 will go into mass production in September. So revealing it at a September event with a release later in the year wouldn’t be a shocker.
Apple To Use New Storage Purchase To Launch Netflix Killer (MacStories)
According to Jefferies analyst Peter Misek, Apple is on the cusp of launching “a new far reaching cloud-based service” focused on video. The company will use its massive data centre in North Carolina to offer an advanced web-based video subscription product that rivals Netflix. This will allow Apple to take advantage of its iOS lock-in and increase device sales. The report seems to be informed speculation more than hard fact. But Jay Yarow at Business Insider believes it makes a lot of sense.
Amazon Launches Ad-Supported Kindle To Compete With iPad (AppleInsider)
As consumers increasingly turn to the iPad for reading, Amazon has bottomed out on price in order to compete, announcing a cheaper ad-supported version of its Kindle e-reader. The new device will display ads and special offers on the screen-saver and on the bottom of the home screen. Dan Frommer at Business Insider believes that Amazon’s new ad-supported Kindle isn’t just the future of e-readers, it’s a look at the future of gadgets. That’s Apple’s goal with the iPad too. The difference is, Apple wants to do it while remaining profitable on the hardware.
The iPhone Killed The Flip Star, No Matter What CEO Says (GigaOM)
Cisco is killing its Flip handheld. To anyone who has been watching the rise of the smartphone, this shouldn’t come as a surprise. Although, Jonathan Kaplan, the CEO behind the video recorder, believes that neither the rise of the smartphone nor the Flip’s lack of connectivity killed the device. Really? I’m pretty sure you can chalk it up to sophisticated, mobile software platforms with Internet connections that are infinitely more useful than the Flip. Call me crazy. Dan Frommer at Business Insider agrees.
Is Apple Preparing For Tim Cook As Its Next Act? (Seeking Alpha)
Flash back to last season. Steve Jobs stepped down for medical reasons. The Verizon deal was all but inked, the iPad 2 was already in production and a cadre of other crucial projects that we have yet to hear about were in the pipeline. Everything is in its place. It’s perhaps time to face the fact that we are already in a post-Steve Jobs Apple because, as unfortunate as it is, his returning as a full time CEO is probably not a likely scenario. The world needs to know that the succession attributes have been fully earned by Tim Cook and the management team.