THE APPLE INVESTOR: iPad Clobbers The Netbook Business

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Netbook Sales Fall Off Cliff

Photo: Morgan Stanley

AAPL Shares Off Again
Shares of Apple are down marginally to $244 today, bucking the broader tech market. This is after the stock took a plunge yesterday to pre-iPad levels. Potential future catalysts include monthly NPD data (Mac / iPod business); international pre-sale of the iPad next week with availability on May 28; and the launch of the next generation iPhone (likely June 7 at the Worldwide Developers Conference).  The stock trades at 21x estimated fiscal-year 2010 EPS and 11x Enterprise Value / Trailing Twelve Months Free Cash Flow.

iPad Killed The Netbook Star (Fortune)

Netbooks used to be by far the fastest-growing segment of the PC market. Everyone was ga-ga about netbooks. Henry Blodget at Business Insider reminds us that Apple was getting grief for refusing to offer a netbook because Steve Jobs didn’t think the company could make one that didn’t suck. Well, all that has changed (at least temporarily) with the release of the iPad. In April (the month the new tablet was released) netbook sales barely grew. While great news for Apple, it is bad news for PC makers as well as Microsoft, which bundles Office on a majority of netbooks.

iPhone For Verizon Not Happening Until 2011 Thanks To AT&T iPad Pricing (ComputerWorld)
AT&T picked up six more months of exclusive access to Apple’s iPhone thanks to the data plan it offers for the iPad, says Broadpoint AmTech tech analyst Brian Marshall. The analyst says “AT&T had to do something dramatic to get the iPad.” That would be the 3G pricing. iPad owners don’t have to sign up for contracts, and they get data plans for cheap. For that, AT&T gets to keep the iPhone until 2011. This was the same analyst that was convinced Verizon would get the iPad contract earlier this year.

Wall Street Weighs In With Praise On The Mobile Computing Front
Apple continues to be a stand out with iPhone sales momentum. iPad upside likely.

  • Oppenheimer wireless analyst Ittai Kidron released a first quarter wireless snapshot that showed Apple gaining share (0.5% points to 15.5% and 8.8 million units) and dominating overall industry profits (accounting for 40% of the total market and 54% of smartphone profits).
  • Barclays Capital analyst Ben Reitzes met with Apple management and believes that the company is “clicking on all cylinders.” There is still upside in the stock driven by what Reitzes expects to be better-than-expected sales of both the iPad and the iPhone businesses through the calendar year. Estimates continue to be conservative even in light of macro concerns surrounding Europe. Ben reiterates his Overweight rating and $315 price-target.

Apple Winning The Sentiment War Against Google (Seeking Alpha)
Based on market share data in respective markets and financial margins, the lines are blurred as to which company comes out ahead, Apple or Google. If you look at recent press articles, it’s hard to pick a stand out winner as well. As a result, Seeking Alpha contributor Jett Winter turns to sentiment. Based on Piqqem, Apple’s sentiment lead over Google grew from 10 points at the end of November to an impressive 22 point lead at the end of March. That certainly doesn’t sound like a loss of cool.

iPhone With Internet Capability Gets Approved In China (The Wall Street Journal)
The iPhone launch in China last year was muted due to the lack of Wi-Fi capability. The Chinese government forces handset makers to use China’s proprietary wireless standard WAPI. According to a government testing agency, that may be changing as Apple has been approved for a handset with Internet capability. Along with building out 25 more retail stores, adding Wi-Fi would certainly help the iPhone’s reception in the worlds biggest market.

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