THE APPLE INVESTOR: iPad Already Killing The Kindle!

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Steve Jobs iPad

AAPL Hanging On To Gains
AAPL is trading sideways today as it tries to hang on to its all time high. The shares are down about $0.50 at $241.71. AAPL currently trades at the high-end of the tech group at 20x estimated fiscal-year 2010 EPS and 19x Enterprise Value / Trailing Twelve Months Free Cash Flow. Upcoming catalysts include March sales data on Mac unit sales (out tomorrow); March quarter results on Tuesday, April 20 (after close); and the launch of the next generation iPhone this summer.

As Analysts Wait For Earnings, It’s Anyone’s Guess (Stock Blog Hub)
Leading up to Apple’s earnings announcement, analysts are making predictions:

  • Barclays Capital’s Ben Reitzes believes the iPhone’s new operating system will drive a strong upgrade cycle beginning in June when the new hardware is launched, making his recently raised estimates conservative.  In addition, strong anticipated Q110 PC unit data out tomorrow will likely support his view that Apple will beat his estimate of 39% unit growth for the quarter. Reitzes believes Apple’s valuation is highly attractive as a multiple of free cash flow and reiterates his Overweight rating.
  • Piper Jaffray’s AT&T analyst Chris Larsen believes the iPad’s strain on the AT&T network is minimal and there are positive economics from the current data plan.  This is good for Apple since it clearly doesn’t need any more problems with AT&T’s network (customers have not been shy with their complaints of poor service). For AT&T, Larsen believes the average iPad customer has a net present value (NPV) of nearly $1,000. While this might be less than that of an average iPhone subscriber (~$1,500), at zero customer acquisition cost, the payback period is much faster.

iPad Already Killing The Kindle (BusinessWeek)
Early reviews suggest the iPad is a much better product than competing e-readers, specifically the current market leader Amazon’s Kindle. The versatility and the colour touch-screen of the iPad is much sexier than those offered by competing e-readers, says Olga Kharif at BusinessWeek. Various Amazon Wall Street analysts have cut Kindle unit estimates this year because of competition from Apple’s new category maker (and killer). While not boding well for Kindle’s mastermind, Jeff Bezos, it’s looking quite good for the iPad since estimates across the board remain quite healthy.

Apple’s New Developer Agreement Causing A Ruckus All Around! (Daring Fireball)
Steve Jobs’ announced changes to the application developer agreement at the iPhone OS 4 launch has caused quite a firestorm of criticism and backlash. Jobs himself has advised critics to read John Gruber’s article.

  • Jeffrey Ely, contributor at Seeking Alpha, argues that it’s “anti-competitive.” Considering that anyone can still write an app on the iPhone as long as they meet the Apple standard, that argument might be a stretch.
  • Peter Kafka at All Things D believes that Apple is cutting out rival mobile networks. Perhaps the FTC is looking into the wrong company (Google / AdMob).
  • Gene Munster at Piper Jaffray believes the iPad will only increase developers’ appetite to work with Apple over the long-term. At 50 million iPhones and nearly half a million iPads sold, other than Android, what choice do they really have?
  • Robert Scoble looks at the difference between Apple in 1994 (nearly dead) and Apple now. The main difference, Apple now controls the developer. How do you keep developers from developing on other platforms? “Well, easy, make it against the rules!”

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