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Kaufman Bros ups Apple target on expectations of "blowout" Q1

post #1 of 33
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Strength in all of Apple's core business segments during the December quarter is likely to see the company breeze past already heightened expectations on Wall Street, investment bank Kaufman Bros. said Wednesday.

"Despite continued difficult macroeconomic conditions and ever rising investor expectations, we anticipate Apple could still post material upside to recently raised consensus estimates, not to mention its conservative guidance, driven by strength in all three major product lines, particularly its iPhone business," analyst Shaw Wu wrote in a note to clients.

More specifically, Wu said Apple could ship a record high 9.5 million iPhones during the three-month period ending December, given information from his sources that indicate strong momentum in the U.S., a more material contribution from Asia-Pacific (China and Korea); and a stronger-than-expected uptake in Europe due to multiple carriers and more attractive prepaid service plans.

That would put Apple close to Research in Motion, which moved 10.1 million BlackBerries during its recently-ended November quarter, and best its own quarterly sales record of 7.4 million units, which was set last quarter. On average, Wall Street is expecting the Cupertino-based company to report sales of 8.8 million units, while some individual analysts have made predictions as high as 11 million units.

Meanwhile, Wu also sees continued momentum in Apple's Mac business, driven by new widescreen iMacs and MacBooks. However, he took pause in his note to clients to express concern that supply constraints on LED flat panel displays could limit upside potential, as Apple has been unable to fill all of its pre-holiday orders, particularly 27-inch iMacs.

"We are leaving our forecast at 2.9 million Macs (consensus at 2.85 million). For iPods, we remain comfortable with our aggressive forecast of 22 million units (consensus at 20 million)," he wrote. "Our sources indicate continued iPod touch momentum driven by the iTunes App Store and strong uptake in its new iPod nano with built-in video camera."

Wu reiterated his Buy rating on shares of Apple, raising his price target to $253 from $235. For the December quarter, he's forecasting Apple to earn $2.15 per share on sales of $12.4 billion, compared to management's guidance of $1.70-$1.78 per share on sales of $11.3 billion-$11.6 billion. As a whole, Wall Street is at $2.04 per share on sales of $11.9 billion.
post #2 of 33
The hype machine is working. This tablet better cure a disease.
post #3 of 33
Quote:
Originally Posted by AppleBiter View Post

The hype machine is working. This tablet better cure a disease.

The disease is called "analystitosis".

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post #4 of 33
Quote:
Originally Posted by AppleBiter View Post

The hype machine is working. This tablet better cure a disease.

Eh, the tablet will have a hard row to hoe, a success launch might lead to sales of what ... 1.5 - 3 million units in the first year? Sure, everyone is curious about it, but I haven't seen much hype about land office sales like the iPhone had.

That said, Apples ongoing success hinges on continued uptake of Apples existing line-up of products and continued updates to them.
post #5 of 33
That is 220k short of my 3.12M Macs to be sold this quarter. Im still hopeful.


Quote:
Originally Posted by SpamSandwich View Post

The disease is called "analystitosis".

Also referred to as Wus Disease?
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post #6 of 33
Well, iPod touch sales are at least looking rather spectacular: http://www.macobserver.com/tmo/artic...1000_xmas_day/
post #7 of 33
Quote:
Originally Posted by battiato1981 View Post

Sure, everyone is curious about it, but I haven't seen much hype about land office sales like the iPhone had.

Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.
post #8 of 33
Quote:
Originally Posted by lkrupp View Post

Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.

I'm certainly not talking about betting against it, au contraire ... my comment was in response to the initial comment by SpamSam implying that the Tablet would need to cure cancer or something to live up to the hype (...and succeed?).

When Jobs introduced the iPhone he set the hurdle of of 10 million units in the first year. Should be interesting to see if he, or whoever introduces it, makes any sort of prediction at all about sales targets.

Haven't seen much along these lines yet, but there was a bit of speculation a while back about some sort of subsidized plan for this thing ... Could a ragged consortium of print and video content providers provide something similar for a bundled package of enhanced content for the device?

Currently I the only paper I pay for is the Sunday NYT (here in Seattle). No cable, have never bothered with that. I do have some renewing passes on iTunes (Daily Show and my wife loves her Desperate Housewives, etc). Give me a choice of bundled packages on iTunes with my choice of options that includes new print media (ala the Sports Illustrated demo reel) and this could end up being a lot cheaper initial outlay for buyers, sharply increasing sales. Bring a $750 device down to $400 and while it won't take the world by storm, it will be disruptive and all that. Then in another year, lower price again, etc.
post #9 of 33
Imagine what it would be like when the real tablet is announced.
80 million iPhones by 2012. That's only 15% of the market.

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80 million iPhones by 2012. That's only 15% of the market.

http://www.iphonethailand.net
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post #10 of 33
Quote:
Originally Posted by lkrupp View Post

Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.

Case in point: http://blogs.msdn.com/sprague/archiv...will-fail.aspx
post #11 of 33
Quote:
Originally Posted by lkrupp View Post

Incorrect. The very same predictions were made about the iPhone as you now make about the new device. Every pundit out there predicted epic fail for the iPhone. Nokia laughed, Dvorak laughed, Ballmer giggled. And before that it was the iPod. And before that it was the Mac. Nobody's laughing now, are they. And so it will be with this tablet or whatever. Will it succeed like the iPhone and iPod? We'll just have to wait and see won't we? But if you go by past performance I definitely like the odds and wouldn't bet against it.

Ballmer doesn't giggle. He titters.
post #12 of 33
Woo-hoo!

I mean, Wu-who?
post #13 of 33
Quote:
Originally Posted by crees! View Post

Case in point: http://blogs.msdn.com/sprague/archiv...will-fail.aspx

Another perfect example of having a blog doesn't mean you know what you're talking about.
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Apple is not Appl ...... Please learn the difference!    
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post #14 of 33
Quote:
Originally Posted by newbee View Post

Another perfect example of having a blog doesn't mean you know what you're talking about.

Did that jerkwad ever have to pay off on the bet he offered? I notice he closed the thread to further comments. Wonder if he ever had to admit how wrong he was?
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post #15 of 33
Quote:
Originally Posted by newbee View Post

Another perfect example of having a blog doesn't mean you know what you're talking about.

That dear old know it all richard sprague disappeared from his blog and hasnt posted anything since june 08....I guess he really had to eat his words and would rather disappear quietly into the night instead of excusing his myopic view...
post #16 of 33
I figure that at least $20 is priced in the stock due to the Tablet expectations. If the product is not announced in January, the stock could overreact on the downside to end below 190. What has been factored completely are blowout sales of the iPod and Macs.

I am long, but any overreaction of the downside especially way below 190, will be a buying opportunity if it is just because of the deflation of the Tablet hype.

Another good thing about this stock are the deferred revenues. At 190, the enterprise PE is around 15-16. At 160 the stock becomes a steal.
post #17 of 33
Quote:
Originally Posted by iphonedeveloperthailand View Post

Imagine what it would be like when the real tablet is announced.

The stock will likely dive because virtually every Apple product announcement does not meet expectations. The tablet will be no different, and it could be really bad given the huge amount of hype. Eventually people will realize the value of the features that the tablet does have though.
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post #18 of 33
Quote:
Originally Posted by iphonedeveloperthailand View Post

imagine what it would be like when the real tablet is announced.

เราจะยุบทั้งหมด!

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post #19 of 33
Quote:
Originally Posted by AjitMD View Post

I figure that at least $20 is priced in the stock due to the Tablet expectations. If the product is not announced in January, the stock could overreact on the downside to end below 190. What has been factored completely are blowout sales of the iPod and Macs.

I am long, but any overreaction of the downside especially way below 190, will be a buying opportunity if it is just because of the deflation of the Tablet hype.

Another good thing about this stock are the deferred revenues. At 190, the enterprise PE is around 15-16. At 160 the stock becomes a steal.

Set your limits and prepare to clean up!

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post #20 of 33
At this rate I wonder how long it will take for Apple's value as a company to surpass Microsoft?
post #21 of 33
Quote:
Originally Posted by AppleBiter View Post

The hype machine is working. This tablet better cure a disease.

Why don't you read the original post a bit more carefully? The tablet was never mentioned. Wu expects that THIS WAS a blowout quarter based on terrific iPhone, iPod, and Mac sales.

AAPL shares are going to climb with or without the rumored tablet. Analysts STILL are using an EPS of $7 for AAPL, in spite of the fact that it is known that AAPL is now allowed to account for iPhone sales immediately instead of deferring the revenue. This is going to drive the EPS to about $12, which will in turn drive all of these analysts (who are still using the old numbers) to offer upgrades.

Adding a tablet to the product array will just be a little gravy, even if it is a modest seller (which I actually expect).

Thompson
post #22 of 33
Just out of curiosity, are there currently any slate or tablet devices that exist? Because I have seen only a glimpse of existing products made by microsoft that is not doing well at all, I don't even think they are selling/producing them currently.

If anyone can post me a link to a successful tablet/slate product that is already out right now not made by apple that is performing well.
post #23 of 33
Are any of these trending ideas about to coalesce in a ginormous Apple product introduction? Who knows?

Ray Kurzweil's Blio e-reader software:
http://www.wired.com/gadgetlab/2009/...kurzweil-book/
(to appear on this site soon) http://blioreader.com/

Bridgestone's color e-ink display technology:
http://www.epapercentral.com/bridges...er-display.htm

Touchco:
http://touchco.com/

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post #24 of 33
Quote:
Originally Posted by AjitMD View Post

At 190, the enterprise PE is around 15-16. At 160 the stock becomes a steal.

What do you mean by 'enterprise PE'? How did you arrive at the '15-16' number?
post #25 of 33
Quote:
Originally Posted by zindako View Post

Just out of curiosity, are there currently any slate or tablet devices that exist? Because I have seen only a glimpse of existing products made by microsoft that is not doing well at all, I don't even think they are selling/producing them currently.

If anyone can post me a link to a successful tablet/slate product that is already out right now not made by apple that is performing well.

http://www.archos.com/

No idea how well they are doing, but they keep expanding on their tablet line up. Tablets are really an emerging market, the technology to make tablets powerful enough and user friendly enough just wasn't there before so it is hard to find established players. There are plenty of companies itching to get in though. Microsoft has the courier concept, ereaders are getting colour touch screens to supplement eink, HP is rumored to be making a tablet, android tablets are rumored, multi touch phones like the iPhone are essentially mini tablets looking to be expanded upon, and smaller companies are even throwing their hat into the ring ( https://thejoojoo.com/ ). A lot of people obviously think that this will be the next big thing, even magazine publishers are preparing to sell their material on tablets that don't exist yet. This is market that is primed and ready for Apple to bring it into the limelight.
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post #26 of 33
Quote:
Originally Posted by cmf2 View Post

http://www.archos.com/

No idea how well they are doing, but they keep expanding on their tablet line up. Tablets are really an emerging market, the technology to make tablets powerful enough and user friendly enough just wasn't there before so it is hard to find established players. There are plenty of companies itching to get in though. Microsoft has the courier concept, ereaders are getting colour touch screens to supplement eink, HP is rumored to be making a tablet, android tablets are rumored, multi touch phones like the iPhone are essentially mini tablets looking to be expanded upon, and smaller companies are even throwing their hat into the ring ( https://thejoojoo.com/ ). A lot of people obviously think that this will be the next big thing, even magazine publishers are preparing to sell their material on tablets that don't exist yet. This is market that is primed and ready for Apple to bring it into the limelight.

I didn't include joojoo because I think they may end up locked in a legal battle with Mike Arrington.

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post #27 of 33
Quote:
Originally Posted by SpamSandwich View Post

I didn't include joojoo because I think they may end up locked in a legal battle with Mike Arrington.

It definitely is a strange story.
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post #28 of 33
Quote:
Originally Posted by zindako View Post

Just out of curiosity, are there currently any slate or tablet devices that exist? Because I have seen only a glimpse of existing products made by microsoft that is not doing well at all, I don't even think they are selling/producing them currently.

If anyone can post me a link to a successful tablet/slate product that is already out right now not made by apple that is performing well.

I don't think there's anything that fits all of your criteria.

There might be a few specialty tablet devices for highly specific industrial uses, but nothing on the consumer electronics side in terms of volume. There are certainly a few tablet PCs out there, including a modded MacBooks as well as Wintel PCs, but none of them sell well. There are probably a few consumer-grade tablets with very limited functionality (the Amazon Kindle is one).

The other class of devices are a little small to be described as slates or tablets. The iPod touch and some PDAs would fall into this category.
post #29 of 33
Just out of curiosity, why is this thread about the tablet? The article never mentions it.
post #30 of 33
With Apple's stock reaching an all-time high a few days ago as indicated in this article...

http://www.alltabletnews.com/2009/12...es-a-new-high/

...I wouldn't be surprised if Apple's stock reaches another high just before the Tablet is officially announced in late January. I kinda wish I had a time machine to go back at least 10 years. I coulda bought me a lot of Apple stock.
post #31 of 33
Quote:
Originally Posted by Maxseattle View Post

At this rate I wonder how long it will take for Apple's value as a company to surpass Microsoft?

4 months ago
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beatles
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post #32 of 33
Quote:
Originally Posted by zindako View Post

Just out of curiosity, are there currently any slate or tablet devices that exist? Because I have seen only a glimpse of existing products made by microsoft that is not doing well at all, I don't even think they are selling/producing them currently.

If anyone can post me a link to a successful tablet/slate product that is already out right now not made by apple that is performing well.

The thing is that Apple tends to (but not always) do it much better than anyone else. The first computer to ship with a mouse came from Apple; at first there were negative comments but now mice are everyday items. The iPod wasn't the first MP3 like player; they just made it much better. DItto for the iPhone: it wasn't the first smart phone, but it was much better. Then there is the app store.

If Apple decides to create a tablet, chances are it will be pretty amazing.

 

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post #33 of 33
Quote:
Originally Posted by Rhetoric.assassin View Post

That dear old know it all richard sprague disappeared from his blog and hasnt posted anything since june 08....I guess he really had to eat his words and would rather disappear quietly into the night instead of excusing his myopic view...

That's such a great find. Note that he falls into the "serious people" trap, which can also used as a defense. If you're dead wrong about how popular a product is going to be, you can always claim that it's only being bought by people who aren't serious.

Quote:
Originally Posted by cmf2 View Post

The stock will likely dive because virtually every Apple product announcement does not meet expectations. The tablet will be no different, and it could be really bad given the huge amount of hype. Eventually people will realize the value of the features that the tablet does have though.

Maybe you should check out Sprague's blog. Very instructive.
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