THE APPLE INVESTOR: New, Improved iPad Coming As Soon As 2Q '11

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3G iPad

Photo: Gizmodo

AAPL Recovering After rumour Sell Off
Stocks are down in early trade amid deepening worries about European debt loads. Shares of AAPL, however, are regaining ground lost yesterday on rumours COO Tim Cook was leaving for HP. Upcoming catalysts include monthly NPD data (Mac / iPod business); iPhone sales updates and carrier diversification; iPad sales updates and expansion; new content revenue streams such as video, books and social (Ping); and the uptake of the newly refreshed Apple TV. AAPL trades at 16x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Research Weighs In: It’s All About The iPad (Various)
Strong demand and perhaps version 2.0 in the works:

  • Goldman Sachs Pan-Asia analysts Henry King and Kevin Lu believe Apple will introduce a second-generation iPad during the second quarter of 2011 that will be thinner and lighter, with an embedded camera and mini USB. Citing supply chain checks, they believe that Hon Hai will remain the sole manufacturer of the new 9.7-inch model.
  • T. Michael Walkley at Canaccord Genuity analyst reiterated his Buy rating on Apple and bumped up his price-target price on the shares to $366 citing strong continued demand for the iPad. Walkley increased his iPad unit sales to 13.4 million units from 12.6 million for calendar 2010 and to 25.5 million from 22.6 million for calendar 2011.

Not A Good Time To Buy Apple Based On High Expectations (Fortune)
What do universal adulation, a soaring stock price and near-unanimous Wall Street support add up to? According to Scott Cendrowski at Fortune, a bad time to buy Apple stock. Apple’s stock price is built on the expectation that sales will continue to rocket. What if one of its handful of cash cows plateaus or a new product fails? Can Apple then sustain a five-year annual sales growth rate of 35% and increase cash flow 65% a year? The company’s underdog days are behind it, and now it faces a nemesis that can paralyze any stock: the tyranny of high expectations. Vincent Fernando at Business Insider takes it one step further saying that one misstep could tank the entire market. No pressure guys.

Hulu Plus Hopefully Coming To Apple TV (MacRumors)
Roku and TiVo announced that they are bringing support for Hulu Plus subscriptions to their set-top boxes, leading to speculation that a similar deal could eventually be struck for the new Apple TV. Hulu Plus launched on the iPad, iPhone and iPod touch earlier this year so it seems reasonable to speculate that a version for the iOS-based Apple TV could be in the works. At this point, it is unclear whether Hulu will be compatible with AirPlay (allow users to stream content from their portable iOS devices to Apple TV). Regardless, native support for Hulu Plus on Apple TV would be a significant feature addition.

Sixth-Generation iPod Nano Yields Nice Margin (iSuppli)
According to research firm iSuppli, the parts comprising the 8 GB version of the sixth-generation iPod nano cost around $44 with a combined material and production cost of $45. This adds up to about 30% of the retail price, or the second lowest bill-of-materials of all members of the iPod line. That’s quite a nice gross margin.

Ad Requests For Apple Soaring But Android On Its Heels (Apple Insider)
Ad firm Millennial Media found that iPad ad requests grew 76% month-over-month in August. They also hold that iOS share of U.S. smartphones on its ad network remained relatively flat at 48%. The number of devices running Apple’s iOS remains nearly twice as large as the next-largest smartphone platform, Google Android, which represented 26% with ad requests increasing 39%. Since January, Android has grown 996%.

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