The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
AAPL Up In A Climbing Market
The market opened in the negative as Asian markets were mixed in overnight trading and European markets were down heavily. But news that the ADP unemployment data crushed expectations adding some 297,000 jobs to the private sector and that ISM Non-Manufacturing Index came in higher than expected gave U.S. stocks a lift and the market is currently climbing up. Shares of Apple are up marginally. Upcoming catalysts for Apple include the launch of the Mac App Store this Thursday; monthly NPD data (Mac / iPod business); iPhone and iPad sales updates and carrier expansion (Verizon); new content revenue streams such as video, books, newspapers and social (Ping); moving iTunes into the cloud; and the uptake of the new Apple TV. Shares of Apple trade at 15x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Analyst Ups Price-Target On Strong iPhone And iPad Demand (Apple Insider)
Apple is poised to report yet another record-breaking quarter this month, with channel checks indicating sales of the company’s iPhone, iPad and Mac computers are tracking ahead of already lofty expectations. With strong global demand for its products and few retail stock-outs over the holidays, Deutsche Bank analyst Chris Whitmore believes the company racked up sales above already lofty expectations. His channel checks over the holidays indicated that Apple saw better-than-expected demand for both the iPad and the Mac. As such, he has upped his price-target to $410.
Most Tablets Are Junk, Analyst Says (Forbes)
In a CES preview note, Apple remains Wedge Partners analyst Brian Blair’s favourite player in the hardware segment and continues to believe the company could ship over 40 million iPad units this year. Most of the tablets coming to market “are junk.” Additionally he believes Apple has essentially made the correct bet that consumers want thinner, lighter and instant on (MacBook Air) while still offering high level specs and a full size keyboard. His view is that this trend is partially in reaction to the iPad and the forthcoming flood of tablet computers, which he believes are changing the way consumers look at portable computing.
The iPad Will Dominate Just Like The iPod (Barron’s)
Barclays Capital analyst Ben Reitzes expects the tablet wars to play out similar to Apple’s iPod market. In other words, everyone is going to have a hard time pushing the iPad aside. Reitzes expects 38 million tablets to be shipped for the entire industry this year, and expects Apple’s market share to be around 60%, or 23 million units. The supply chain is ready to manufacture 70 million units this year if demand is warranted. Reitzes rates shares of Apple Overweight and has a $390 price-target.
Orange UK Blew Christmas For The iPad (The Times UK)
Orange UK announced subsidy plans for new iPads back in November. The company had expected to sell tens of thousands over the holidays. However, it turns out they only sold a little over a thousand in the first week. Deeper sales allegedly occurred later in the holiday season, although there hasn’t been much official confirmation about what that exact number might be. It seems clear that the subsidized iPads haven’t started off as strongly as might have been hoped. The slow start could be due to subscribers being unwilling to stack iPad data plans on top of cellular plans, or Orange might not have gotten word out to its buyers.
Tablet Sales Will More Than Double This Year, And That’s Likely Conservative (Forrester)
Forrester has revised its tablet sales estimates for 2011, claiming to have been “too conservative.” The research firm now predicts that 24.1 million units will be sold in 2011. Interestingly, that’s only half of Brian Blair’s estimate for the iPad alone (above), but more than double the 10.3 million estimate Forrester has put on 2010. Apple is expected to hold the lion’s share of sales through 2012. By 2015 Forrester expects 82 million U.S. consumers, or one-third of U.S. online consumers, will be using a tablet. Part of Forrester’s change in forecast is a faster replacement cycle. Read more at Business Insider.
Developers Looking To Maintain Existing Price-Points For The Mac App Store (The Pocket Cyclone)
With Apple’s Mac App Store set to debut in just two days, developers are beginning to set expectations for their applications, particularly in comparison to their other applications already available through the iOS App Store. For the most part, iOS developers moving their apps to the Mac App Store are looking to maintain their existing price points, which frequently fall in the $1.99-$4.99 price range. While there is the usual amount of speculation out there on technicalities and its potential overall success, it seems widely unclear what will happen on Opening Day. Read the full post at Business Insider.