THE APPLE INVESTOR: Verizon iPhone Looms As AT&T Scrambles To Lock In Subs

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AAPL Continues To Gain Ground
Shares of AAPL continue the run this week, up nearly $5 to $261. Future catalysts for the stock include monthly NPD data (Mac / iPod business); international launch of the iPad on May 28; and the launch of the next generation iPhone (June 7 at the Worldwide Developers Conference).  The stock trades at 22x estimated fiscal-year 2010 EPS and 12x Enterprise Value / Trailing Twelve Months Free Cash Flow.

Wall Street Still Loves Apple (Barclays Capital and Piper Jaffray)
Recent notes out from the street:

  • Gene Munster at Piper Jaffray expects iPhone sales to continue to accelerate due to channel checks that indicate strong demand in April and May ahead of a product refresh this summer.  In addition Munster analysed the recent NPD smartphone data and is interested to see how important being the number one device is to Apple and whether that will translate into new features, promotions or carrier options (Verizon).
  • Barclays Capital analyst Ben Reitzes is pounding the Street again on AAPL today.  Reitzes continues to believe Apple’s valuation is very attractive on a free cash flow basis and thinks shares can benefit from the iPhone upgrade cycle this summer. He recently met with Apple executives and the company continues to be “clicking on all cylinders.” This seems to be a message he likes to reiterate frequently. We wonder how much more conviction he has now than he had last week?

AT&T Pushing Up Upgrade Eligibility to Fend Off Verizon (MobileCrunch)
AT&T is pushing up the upgrade eligibility date for iPhone 3GS from November 21 to June 21, 2010, two weeks after the new iPhone is launched at WWDC. If reports are true that Verizon might release a CDMA iPhone by September and the 5-year exclusive contract with AT&T is no longer valid, AT&T is likely attempting to lock in as many existing customers as possible.  If a Verizon iPhone is released in September AT&T users will have a choice to leave the service for Verizon.

Verizon / Google Tablet Probably Just A Ploy For Verizon To Get Better iPhone Terms (Business Insider)
Verizon Wireless is reportedly working on a tablet with Google to rival Apple’s iPad, according to The Wall Street Journal. Dan Frommer at Business Insider believes this is just Verizon trying to get leverage in its negotiations with Apple for the iPhone. There is no reason for Google and Verizon to pre-announce a tablet collaboration. In fact, there is only downside from delays and other potential disappointments that could occur throughout the months of anticipation. Don’t be surprised if the iPhone, and maybe even the iPad, is available through Verizon before a Google tablet sees the light of day.

Bigger Wireless Carrier China Mobile Wants The iPhone (Reuters)
China Mobile chairman Wang Jianzhou is interested in selling the iPad in China. Jianzhou was also interested in being the carrier of choice for the iPhone but ultimately lost to smaller rival China Unicom last year. Jianzhou says he’s talking to Apple about developing a next-generation iPhone that runs on China’s proprietary 3G mobile standard. Diversifying carriers will likely increase iPhone adoption (globally, not just in China). In addition, China Unicom announced that it was increasing iPhone subsidies (lowering prices) in an effort to boost demand for its 3G mobile service, according to The Wall Street Journal.

Ad Agency Says iPad Won’t Go Mass Market Adoption Any Time Soon (TechCrunch)
Simpson Carpenter ad agency believes that the iPad won’t hit mass market adoption any time soon. The study concludes that consumers can’t see how the device will fit into their lives and will only fill niche and case-specific needs. Part of that issue was likely caused by initial hype not matching up with user expectations. The iPad is off to a start faster than the iPhone and we all know what happened there. More than likely, the early adopters will lead the way and mass-market adoption will follow (fulfilling analyst expectations), especially as prices come down for next generation devices.

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