Apple Investor: Estimated iPad Pre-Orders Soar On Day One; Rest Of Weekend Lackluster

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AAPL Now One Of The Top Five Largest US Companies
The largest companies in the US are: “The biggest oil company. The largest retailer. The leading software company. A conglomerate run by the world’s most respected investor. And Apple.” Friday, the shares closed out a week of solid gains at $226.50, reaching a market cap of $205.5 billion. CNBC analyst, Paul Kedrosky has an interesting thought piece on his blog about market cap and what it really means. In the past week, street estimates have increased gradually and Apple now trades at 17.1x estimated fiscal-year 2010 EPS and 17.8x Enterprise Value / Trailing Twelve Months Free Cash Flow (TTMFCF). Today traders are indicating that there could be a prolonged weakness in the stock before the close of the quarter as investors take profits. That said, upcoming catalysts include speculation on iPad sales; the March quarter earnings release; and the release of the next generation iPhone this summer.

How Steve Jobs And Eric Schmidt Came To Hate Each Others Guts
(The New York Times)
Brad Stone and Miguel Helft of The New York Times provide a good recap of how Apple and Google became the best of enemies. The article focuses on Google’s entrance into the smartphone business; first by the development of its Android mobile operating system then the introduction in January of Google’s own handset, the Nexus One. This evolution put Google squarely in competition with the iPhone.  Apple subsequently sued HTC, the Taiwanese smartphone manufacturer which builds the Nexus One, for patent infringement (an indirect hit to Google). The article points out that the dispute between the two companies is about their diametrically opposing core philosophies. Apple leans towards tighter controls while Google believes in “open, non-proprietary platforms.” The rivalry is expected to intensify this year. As Apple prepares to launch the iPad, Google is rumoured to be developing its own tablet computer that runs Android.

iPad Pre-Orders Soar On Day One; Rest Of The Weekend Fizzles
Fortune summarized a report out from Investor Village detailing the initial analysis of iPad orders based on a sampling of 99 orders for 110 iPads. The social networking site for investors estimates that Apple sold nearly 120,000 iPads on Friday with customers preferring the cheaper Wi-Fi version over the 3G model (due out later in April) by nearly two to one.  Customers typically had no preference with regard to storage since the sample was only slightly skewed toward the cheaper 16 GB. While the sample is small, the research does provide a glimpse into which model consumers are opting for most as well as the potential sale power. Given iPad pricing ($499 – $699), Apple generated any where between $60 – $85 million, with analysts estimating about $75 million for the first day of iPad sales. With gross margin estimated at 55% (according to previous reports), that’s $41 million in profit. That said, the final iPad estimates for the weekend saw 152,000 iPad pre-orders. If this is correct, the pace of sales slowed considerably throughout the weekend.  At the current rate, Apple will sell 1 million iPads one week after it ships to stores. Of course, these are best effort estimates. Apple could put out a press release today saying it sold 500,000. Until we get official word, treat these estimates accordingly.

Apple COO Gets $22 Million Bonus For Keeping Apple Awesome While Jobs Took Leave
(Los Angeles Times)
While Steve Jobs was on medical leave last year, the stock increased 66% in his absence. As a reward, Apple is giving COO Tim Cook a one time $5 million bonus as a thank you for “outstanding performance in assuming the day-to-day operations.” Tim also received 75,000 restricted stock units (vested on March 10, 2011 and March 10, 2012 in equal amounts, pending Cook’s continued employment with Apple). At today’s price of $226 that’s worth $17 million. Combined Tim is looking at a $22 million bonus. That’s more than what Tim received for all of  2009, when his compensation was $14 million. Steve Jobs clearly doesn’t want to lose his right hand man.

Apple And Microsoft: Friends Or Enemies? It’s Getting Difficult To Tell!
(The Seattle Times)
Veteran reporter Brier Dudley at The Seattle Times has covered Microsoft’s rivalries closely; from Oracle and SAP (software), to Yahoo! and AOL (internet), and now Google. It’s not often you hear a company complement its enemies. However, Microsoft has been doing a lot of that lately and Brier says, “this is getting ridiculous…First it was Steve Ballmer at the University of Washington, praising iTunes’ App Store. Then a few days ago it was Brad Smith, the company’s general counsel and senior vice president” as he detailed the alliance forming between Apple and Microsoft against Google. HTC has long been a partner of Microsoft’s, however Brad took a sympathetic view to Apple’s suit. He also went on to say that Microsoft and Apple’s legal teams are tight.

Apple To Replace Your iPad Battery With…A New iPad
With all of the hype surrounding the iPad in the past couple of days, one of the best things about the new gadget is the battery replacement program. All iPhone and iPod users know how horrendous the battery life typically is.  So, to avoid similar backlash the company will replace the dead iPad battery with an entirely new one that will cost you only $106. Apple will also transfer your data if you’re not smart enough to sync it with your computer. Either the criticism Apple has taken over the years is finally sinking in, the company has incredible confidence that no battery will die, or we are greatly underestimating the margin potential and the pricing leverage the iPad holds. Perhaps a drop in price isn’t that far off.

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