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The iPad: Apple Turns Back The Hands of Time
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DawnTreader
- [ Ignore ]
This is it folks. The Apple iPad nears release.
I see this product as an embarkation point for publishers and other content providers to jump on the Apple economic flagship.
In my view the iPad represents the end of the PC era as we know it and this product will eviscerate the last vestiges of one of Apple’s biggest corporate blunders. For more on that that point of view please see my latest post at Eventide.
I haven’t been this excited about a new Apple product since the release of the original Bondi blue iMac. I expect the Apple iPad to transform the way we consume and carry content.
From an economic standpoint the iPad is a product that will have an economic impact on an eco-system beyond that of the release of Win 95 fifteen years ago.
It’s now the Apple era. Apple has turned back the hands of the time and for the next few years will reign as the undisputed global leader in mobile communications and mobile content distribution and consumption. I’m that bullish on this product. I expect Apple to hit my 12-month price target of $384 per share.
The adoption of the iPad on a global scale will determine how quickly the shares reach $400 and how far above that price the share ultimately travel.
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DawnTreader
- [ Ignore ]
I’m doing some early iPad earnings estimates based on a variety of unit volume scenarios. I expect a successful launch of this new device will add $25 to $50 to the share price by the end of this fiscal year.
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goubulibaozi
- [ Ignore ]
And to contemplate further for your earnings modelling:
How many copies of $9.99 Keynote, Pages and Numbers will sell if they are released on the same day? Revenue direct to Apple.
For some it will seem like a mandatory purchase on the first day of ownership.
The rumor news on Bento for the iPad is $5, attractive with iPhone/iPod Touch and Mac integration and profits to Apple via FileMaker.
Additional sales of iPad “extras” - case, dock, etc?
Then there is the totally new e-book contributions from the book store?
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DawnTreader
- [ Ignore ]
And to contemplate further for your earnings modelling:
How many copies of $9.99 Keynote, Pages and Numbers will sell if they are released on the same day? Revenue direct to Apple.
For some it will seem like a mandatory purchase on the first day of ownership.
The rumor news on Bento for the iPad is $5, attractive with iPhone/iPod Touch and Mac integration and profits to Apple via FileMaker.
Additional sales of iPad “extras” - case, dock, etc?
Then there is the totally new e-book contributions from the book store?
The constituent revenue opportunities are amazing for this device. I’m looking forward to the number of major publications announcing iPad versions of product and the value of Apple’s commission on subscription sales.
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I share the enthusiasm expressed by DT et al. I note that Morgan Stanley adds 25 cents per share eps to every million iPads sold. I have earlier stated that Apple will sell 10million+ this year and only limited by production constraints.. The flow thru earnings from apps will eventually eclipse the profit of the hardware imho and is sustainable. To me it seems impossible to overstate how important this device is going to be. I am please to be all in with mostly LEAPs and expect a major buying panic for the iPad and the stock. I have no price in mind at the end of the year. The news flow over the next week should approach hysteria. Even more than the iPhone. I expect this to be Apple’s finest hour.
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DawnTreader
- [ Ignore ]
I share the enthusiasm expressed by DT et al. I note that Morgan Stanley adds 25 cents per share eps to every million iPads sold. I have earlier stated that Apple will sell 10million+ this year and only limited by production constraints.. The flow thru earnings from apps will eventually eclipse the profit of the hardware imho and is sustainable.
The $.25 per share per million iPads sold most likely does not take into account constituent earnings from apps and content generating distribution fees. However, it’s a fairly good number to to use to start the economic valuation of the product.
I agree. Constituent revenue may eventually surpass revenue from hardware sales.
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DawnTreader
- [ Ignore ]
Let’s use the $.25 per share per million iPads sold for a quickly and simple eps multiple valuation.
Let’s say Apple sells 10 million iPads in the first year (a modest forecast). At $.25 per share per million, that’s $2.50 earnings per share. Let’s use a trailing p/e multiple of 22 (also a modest forecast considering the company’s current rates of revenue and earnings growth) that’s a per share boost of $55 by April of next year without factoring the benefit of constituent revenue and earnings. This is also on top of the anticipated growth in Mac and iPhone sales over the same period.
At today’s trading price these shares are a bargain.
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DawnTreader
- [ Ignore ]
I am expecting iPad sales in the area of five million units this fiscal year.
It’s enthralling to consider the revenue stream to Apple as publishers move from print to digital distribution. I’m sure Apple’s distribution fee is less than the cost of print, transport and delivery for newspaper and magazine publishers.
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And, Apple will be doing the mobile ad platform thing - starting Real Soon Now.
I am also optimistic and went the rest of the way in with LEAPs on Jan 29 and Feb 2.
With a planned retirement in 15 months - this is all happening at a most propitious time.
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DawnTreader
- [ Ignore ]
With a planned retirement in 15 months - this is all happening at a most propitious time.
I really don’t want to get ahead of myself here. I’m holding to my current 12-month price target of $384 per share. But If I had 15 months to go before retirement I might also consider it a propitious time to be investing in Apple.
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capablanca
- [ Ignore ]
I share the enthusiasm expressed by DT et al. I note that Morgan Stanley adds 25 cents per share eps to every million iPads sold. I have earlier stated that Apple will sell 10million+ this year and only limited by production constraints.. The flow thru earnings from apps will eventually eclipse the profit of the hardware imho and is sustainable. To me it seems impossible to overstate how important this device is going to be. I am please to be all in with mostly LEAPs and expect a major buying panic for the iPad and the stock. I have no price in mind at the end of the year. The news flow over the next week should approach hysteria. Even more than the iPhone. I expect this to be Apple’s finest hour.
Count me in, as well, though I cannot say I shared DT’s enthusiasm for the blue iMacs. When App Store was introduced, I dreamt out loud that I would pay $1,000 for an iPod Touch (yet to be named) with a bigger screen. Now I can have one for half that, with iWork, iBooks, and a host of apps not then dreamed of. I am not an early adopter, but I am eager indeed to start adopting iPad next week.
I have yet to meet a real person who does not see this product as a winner. Even Steve Lyons has flip-flopped and hopped on the bandwagon.
In another thread Mace and Deagol were discussing a possible sell-off to 220. If I were not already all-in, I’d look to buy there.
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DawnTreader
- [ Ignore ]
In another thread Mace and Deagol were discussing a possible sell-off to 220. If I were not already all-in, I’d look to buy there.
I’d look to buy even now. 2nd fiscal quarter results appear to be excellent based on reports of Mac and iPod sales. As those results are added to the trailing 12-month p/e multiple there’s plenty of room to move north on the share price with moving above 25 on the multiple.
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capablanca
- [ Ignore ]
In another thread Mace and Deagol were discussing a possible sell-off to 220. If I were not already all-in, I’d look to buy there.
I’d look to buy even now. 2nd fiscal quarter results appear to be excellent based on reports of Mac and iPod sales. As those results are added to the trailing 12-month p/e multiple there’s plenty of room to move north on the share price with moving above 25 on the multiple.
Yes. Completly agree. I did not mean to talk anyone from buying at this level. The stock is undervalued relative to the equity markets as a whole.
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The iPad is gonna be huge as long as it mostly delivers on its speed and battery life promises (and of course proves out to be as reliable as most other recent Apple products). The world economy will have some unquantifiable negative effect on demand, but I agree that Apple can easily sell 5 million iPads in fiscal Q3 and Q4.
As for investing, if I had a 5-10 year time horizon in which I didn’t care what happened to my investment money, I’d go all-in myself. The way the world is these days, though, I’m being a little more cautious. There’s also the folks that were able to hammer AAPL not so long ago. Until the Uptick Rule and/or other anti-manipulation measures make their way to the markets, it’ll likely be a bumpy ride even if we do eventually reach $380 or so.
I may well increase my holdings in AAPL, but I’m making a personal choice not to “bet the farm,” so to speak.
[ Edited: 30 March 2010 04:23 AM by Mav ]Signature
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DawnTreader
- [ Ignore ]
The iPad is gonna be huge as long as it mostly delivers on its speed and battery life promises (and of course proves out to be as reliable as most other recent Apple products). The world economy will have some unquantifiable negative effect on demand, but I agree that Apple can easily sell 5 million iPads in fiscal Q3 and Q4.
Possibly 10 million units this calendar year. If Katy Huberty’s calculations are accurate, that’s $2.50 to eps this calendar year alone. At a trailing p/e multiple of 25, that’s $62.50 to the share price no later than January 2011.
My point is you may not have to wait long to see $380 per share. $384 is my target price for April 2011.
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I haven’t bet the farm on Apple (I retired eight years ago at 55 to go full time artist and have lived very nicely on Apple stock since), if AAPL tanked I’d still have some goats, a cow and 2 tomato plants left over.
I heard Jim Rogers (for better/worse and in seersucker, bow tie and straw hat) say something last summer which struck me. He said that modern portfolio theory is pushed by “advisors” because it makes the brokers rich but rich people get rich by putting all their eggs in one basket and then watching that one basket very very closely. Regardless of where you stand on Rogers and the above quote, watching my Apple “basket” very very closely reveals unique up side potential in a company which lived through the great correction of ‘09 unscathed and which has no discernable downside risk other than doomsday scenarios. I agree that by next year $236ish/share will seem like a good deal.
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