The Apple Investor: Mac Business To Blow The Doors Off March Estimates (Munster)

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AAPL Valuation Metrics
On news that the iPad would hit stores on April 3, Apple stock traded to its all-time high Friday, reaching $218.95 per share (19x FY10 EPS and 17x EV / TTMFCF). Other upcoming catalysts include the iPadĀ  hitting stores and related scuttlebutt and opinion; the March quarter earnings release; and the release of the next generation iPhone this summer.

Munster: Mac Business To Blow The Doors Off March Estimates
(Piper Jaffray)
In a note out this morning, Gene Munster, the Apple axe at Piper Jaffray, states that he would be a buyer of Apple stock ahead of the March 15th NPD data release, which will likely indicate continued blowout growth in the Mac business. While growth rates will ease throughout the year due to the harder year-over-year comparisons, February 2010 data should look incredible given that February 2009 saw the steepest decline in Mac units with a year-over-year decline of 16%. January NPD data suggested 2.6 to 2.8 million Mac units for the March 2010 quarter, implying unit growth of 18% to 26%, above The Street average of 18%. He is overweight the stock with a price target of $284/share (25x FY10E EPS).

Apple Could Reach $882 Per Share, Says Crazy Seeking Alpha Contributor
(Seeking Alpha)
Jason Schwarz, author of Apple Revolution and Seeking Alpha contributor, thinks that Apple “is setting up to be the trade of the year.” We don’t dispute that. Schwarz says, “for hedge funds, Apple is the battleground of a broad market war. If they can move Apple up, the rest of the market will follow. If they can move Apple down, the rest of the market will follow.” This “slingshot” action has now happened seven times since October 2009. Currently, Apple January 2011 $250 call options trade at $13.93 (a one-week spike of 63%) and the QQQQ June 2010 $41 call options trade at $5.89 (a 49% gain). The past six times this has happened, Apple has traded down approximately $20, in line with the market. However the market is in a up-trend and Apple is not likely to trade against it. Comparing earnings multiples with Amazon, Schwarz says if Apple were to enjoy the higher multiple (63x) given to the Internet giant, the stock could trade to $882. But Jason, Apple isn’t an Internet company (not yet anyway). If Apple were to trade at Microsoft’s earnings multiple (16x), a truer comparison at this point in the game, the stock would be $166.

Survey Reveals iPad Going To Crush Kindle
(ChangeWave Research)
Apple’s iPad isn’t even available yet, but it’s already stirring up feelings of envy for people who own rival e-readers like Amazon’s Kindle. A new report from ChangeWave Research reveals that less than half of the people who own an e-reader would have bought that same e-reader if the iPad were already on the market. That’s an ugly number for Amazon, since the Kindle is the undisputed king of today’s e-reader market. Another ugly statistic for Amazon is that when consumers were asked which e-reader they would buy in the next 90 days, 40% of the people said they want an iPad, while just 28% said they want a Kindle, despite the Kindle’s significantly lower price tag. Great news for Apple, whose gadget hasn’t even hit the shelves.

Ballmer Buttering Up Jobs To Replace Google With Bing On The iPhone
(Seattle Times)
Steve Ballmer complemented the company that has crushed Microsoft this decade, gushing that “Apple’s done a very nice job that allows people to monetise and commercialize their intellectual property.” There’s either an ulterior motive in the works or he’s going soft in his old age. In January, BusinessWeek reported that Microsoft and Apple were in talks to replace Google as the bundled search engine on the iPhone. Ballmer’s remarks could be one manifestation of that becoming a reality. Without a doubt, Google is one of the biggest threats to both companies, so why not team up against the behemoth? It wouldn’t be surprising, as Apple is locked into a legal battle with Nexus One maker, HTC. The swap would be a big win for Microsoft and likely aid in increasing its share of the overall search market, something the company has been focused on since the days of Yahoo!. It would obviously be a hit to Google however, whose CEO Eric Schmidt said that mobile will be the company’s number one area of growth for 2010.

Initial Rush On iPad Sales Should Soften Through The Summer And Build Through Back To School And Holidays
It is general consensus that the iPad will initially fly off the shelf when it goes on sale in four weeks. Initial inventory constraints could strain supply, according to some analysts. Remember, it took Apple approximately six weeks to fully stock stores with the iPhone 3G release in 2008 as well as the 3GS the following year. That said, shortage of supply (and pent-up demand) have not crippled the company in the slightest. The initial iPad rush should carry through the 3G launch in April, then sales could soften through the summer and build momentum again through the back-to-school September quarter and then on into the holidays. It is likely going to be a very hot product for the holiday season; even more so if Apple decides to cut prices.

iPad Games To Give Incumbent Gaming Companies A Run For Their Money
(Business Insider)
Gaming on the iPhone and iPod touch has been a huge hit for Apple. According to Dan Frommer at Business Insider, the gaming experience on the iPad could be even crazier; game developers he’s reached out to are ecstatic. Besides having larger, more vivid graphics, and more pixels to use for game controls, the iPad will offer more multi-touch input sensors, therefore adding new control possibilities to iPad games. To be sure, there will obviously be some limitations, like the device’s relatively hefty weight and its initially small user base. But if it’s ever cheap and/or popular enough to make its way into millions of living rooms, it could give gaming heavyweights like Microsoft, Nintendo, and Sony a run for their $19 billion dollar market in the US alone.

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