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UBS ups Apple target, says iPhone 'can thrive as a convergence platform'

post #1 of 14
Thread Starter 
Good grief. The numbers from this analyst actually make sense!

I think the cannibalisation rate is probably too high... this is not a iPod replacement yet, nor is the 'vPod' we've been waiting for (too small a memory) and in the first instance people will 'just buy them'

I also think sales projection for 2008 is conservative. I suspect that Apple will beat their target for 10M sales BY A MILE. There will undoubtedly be more than one iPhone class product by then.
post #2 of 14
Quote:
Originally Posted by vinney57 View Post

Good grief. The numbers from this analyst actually make sense!

I think the cannibalisation rate is probably too high... this is not a iPod replacement yet, nor is the 'vPod' we've been waiting for (too small a memory) and in the first instance people will 'just buy them'

I also think sales projection for 2008 is conservative. I suspect that Apple will beat their target for 10M sales BY A MILE. There will undoubtedly be more than one iPhone class product by then.

I think most of his numbers are low. They don't gibe with other analysts, or my own estimates.

But, I don't think Apple will sell more than about 12 to 15 million phones by the end of 2008. I gave a lot of reasons in the thread about it.
post #3 of 14
UBS Investment Research on Tuesday increased its estimates and 12-month price target on shares of iPod maker Apple, Inc., saying it sees the company's new iPhone device as a 'revolutionary' product that 'can thrive as a convergence platform for years to come.'

"We believe the iPhone is a 'stunner' -- far exceeding our expectations in terms of features, design and capabilities," analyst Ben Reitzes wrote in a note to clients Tuesday evening. "We are particularly excited about the iPhone's potential to boost revenue and earnings with not only hardware, but also services and accessories."

Meanwhile, Reitzes said his proprietary checks indicate that Apple had 'a very strong' fiscal first quarter, with momentum in Macs continuing and strong sales of iPods -- the shuffle and 2GB nano in particular.

"Given continued momentum in sales of core products, combined with the new products announced today, we are raising our estimates through [fiscal 2008]," the analyst told clients. "We believe Apple is not done innovating -- and expect the company to release new products throughout the year including new Macs and iPods, additional content partners and possibly even ultra-portable devices that should stimulate revenue re-acceleration throughout the year."

Reitzes raised his fiscal 2007 earnings-per-share (EPS) estimate to $2.87 (was $2.84) based on 25 percent revenue growth to $24.05 billion (was $23.76 billion) and operating margins of 13.3 percent (unchanged).

"Note that our estimates now call for iPod/iPhone unit sales of 54.6 million (was 54.1 million), including 850,000 iPhone units," he wrote. "As mentioned above, our estimates reflect an approximate 40 percent cannibalization rate of iPods to be conservative."

Given the impact from the iPhone as well as contribution from related accessories, the analyst also increased his fiscal year 2008 EPS estimate to $3.58 (was $3.35) based on 31 percent revenue growth to $31.5 billion (was $28 billion) and operating margins of 13.1 percent (was 13.6 percent).

An iPhone prototype runs Apple's iTunes Cover Flow software during Macworld Expo in San Francisco.

He said the revised 2008 estimates reflects iPod/iPhone unit sales of 70.7 million (was 66 million), including iPhone unit shipments of 7.4 million. "We cut our operating margin estimate based on the view that the mix shift toward fully featured smartphones could result in lower margins as Apple ramps sales," he explained.

In terms of Apple's recently-ended fiscal first quarter of 2007, Reitzes kept his EPS estimate unchanged at $0.80 based on 11 percent year-over-year revenue growth (+32 percent quarter-to-quarter) to $6.4 billion and operating margin of 14.2 percent.

"This estimate continues to factor in iPod unit growth of 18 percent year-over-year to 16.56 million, with a segment revenue decline of 9 percent year-over-year to $2.65 billion off a very difficult compare," he wrote. "Our estimate also factors in Mac unit growth of 44 percent to 1.8 million with revenue growth of 44 percent to $2.5 billion."

Reitzes reiterated his Buy rating on shares of Apple, upping his 12-month price target to $118 from $108.
post #4 of 14
The beauty of the new iPhone "case" is that it could be scaled up or down for features... it could be reconfigured as the home media controller, or it could be simply the iPod+web browser if they wanted to sell at different price points and target markets. Steve, I gotta hand it to ya.

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post #5 of 14
Spam's right, iphone customability is extremely friggin clever, all they gotta do is color it differently and load a different interface on it, maybe drop the camera and they can sell it easily as 2-3 different products.

I'm smelling the split I predicted months ago. Once the options scandal came to light I knew for sure a split was around the corner in jan. I'm so pissed at myself I wanted to buy some stock when it dipped but I didn't have the cheese. *sigh*
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post #6 of 14
I agree with the sentiment above, that this certainly one of the more susbtantive and clearly laid out analyses that I have seen for AAPL.
post #7 of 14
Steve: "...and there's one more thing... we still don't have the rights to call it iPhone... dammit."

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post #8 of 14
Quote:
Originally Posted by SpamSandwich View Post

Steve: "...and there's one more thing... we still don't have the rights to call it iPhone... dammit."

Yeah, they do.
post #9 of 14
Quote:
Originally Posted by melgross View Post

Yeah, they do.

Just a joke, mel. Just a joke. I'm aware of the issues in this case and how Apple could maneuver. Since Cisco does not have a record of defending the name, they are on shaky grounds with their lawsuit.

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post #10 of 14
Quote:
Originally Posted by SpamSandwich View Post

Just a joke, mel. Just a joke. I'm aware of the issues in this case and how Apple could maneuver. Since Cisco does not have a record of defending the name, they are on shaky grounds with their lawsuit.

I could be wrong on this too.

My wife, who is a lawyer, had gotten word through the "network" Tuesday, that Apple HAD signed the documents. She called me to tell me that. But, now that seems to be incorrect. It's odd. I can't imagine why.
post #11 of 14
Quote:
Originally Posted by melgross View Post

I could be wrong on this too.

My wife, who is a lawyer, had gotten word through the "network" Tuesday, that Apple HAD signed the documents. She called me to tell me that. But, now that seems to be incorrect. It's odd. I can't imagine why.

Disinformation? Cisco trying to make a splash during CES? There are Cisco ads playing on CNN every 10 seconds tonight, and there's a chance the "lawsuit" could be part of a campaign, as lawsuits can only raise awareness in the good ole' USA...

Geek A: "Oooh, did ya hear, Apple's being sued over the iPhone name?"

Geek B: "Yeah, don't remember who was suing them..."

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post #12 of 14
Quote:
Originally Posted by SpamSandwich View Post

Disinformation? Cisco trying to make a splash during CES? There are Cisco ads playing on CNN every 10 seconds tonight, and there's a chance the "lawsuit" could be part of a campaign, as lawsuits can only raise awareness in the good ole' USA...

Geek A: "Oooh, did ya hear, Apple's being sued over the iPhone name?"

Geek B: "Yeah, don't remember who was suing them..."


Apparently, Apple is now contending that their phone is not similar to Cisco's VOIP phones.

Now, I no longer have any idea as to what's going on.
post #13 of 14
Quote:
Originally Posted by melgross View Post

Apparently, Apple is now contending that their phone is not similar to Cisco's VOIP phones.

Now, I no longer have any idea as to what's going on.

They are making a distinction between a cell phone and a VOIP phone. Keep in mind...there are other manufacturers out there using "iPhone" in their product names right now.

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post #14 of 14
Soapbox:
In addition to concerns that the battery may not be changable, I am concerned about the openness of this device. "Platform" somehow implies to me that 3rd parties can climb onto that platform. If one can not load 3rd party software onto it, many potential users are going to be upset, myself included. Me, i'm a physician, and I pretty much need three palm apps to get through my work week: excel-to-go, ePocrates, and salling clicker. The last one I could live without, and since I'm a mac user, you'd think apple could divise a mac remote for a closed platform. But medical software? they're going to need help on this. ePocrates makes pocket PC, palm and web versions of their little suite, and it's simple enough, but really useful.

Now, everyone says all this stuff is moving to "the cloud", and from the internet we'll be able draw ad infinitum. epocrates has already written a desktop, web-based package for this. Why not just be happy with a thin-client, web-based experience? Two problems: first, those page loads were a little slow during that keynote. Second, if everything is moving to the cloud, that access had better be cheap. It had better have that all-you-can-eat feel to it, like broadband landlines do. This would need a paradigm shift. At this point, carriers price data plans like they're afraid you're gonna use them. They need to jump into the next century, drop the rates, and engender a dependence people can actually afford! If they do that, I don't care what software the device has, as long as the phone has safari: Spreadsheet? Safari. Crossword puzzle? Safari. Quicken? safari for that, too.

Apple: either open the platform so people can install software they use, or make "the cloud" a place you can afford to visit frequently. Otherwise, enjoy your 3-5 year lead, because J allard and microsoft are coming, and they're pissed.
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