iPad predicted to drive 50% of Apple's financial growth in 2011
The iPad, a product that didn't even exist a year ago, is expected to cause nearly 50 percent of all growth for Apple in fiscal year 2011, according to one Wall Street analyst.
Robert Cihra with Caris & Company issued a note to investors on Friday noting that Apple's growth is "stunning." He said the company has managed to effectively create its own growth through innovation, while its competitors are lost "in a sea of otherwise commoditized hardware."
In the December quarter, Cihra expects Apple to sell 6.7 million iPads. He has also projected the sale of 32 million iPads in fiscal year 2011, accounting for more growth in Apple's bottom line than the iPhone.
"A product that didn't even exist a year ago... now leads an entire charge to thin-client access/computing architecture," he wrote. He sees the iPad "igniting an explosion toward 'thin-client' access computing, with Apple's most extensible advantage its lightweight iOS software and apps ecosystem."
Cihra sees the iPhone accounting for more than 40 percent of Apple's fiscal year 2011 growth, with 64 million units sold. He also sees another 5 percent expansion in the company's bottom line thanks to the Mac platform, where he sees sales increasing 19 percent year over year.
Accordingly, Caris & Company has raised its price target for AAPL stock to $400, up from its previous projection of $375.
Looking forward, Cihra sees iOS becoming "one of the world's most pervasive operating systems," thanks to an estimated total of 157 million iOS devices sold to date at the end of calendar year 2010.
He also expects Apple to turn on its massive North Carolina data center soon to drive more cloud-based services. Cihra noted that Apple increased its capital expenditures more than 100 percent in fiscal year 2010, driven by non-retail store costs.
Apple plans to increase its capital expenses another 55 percent year over year in fiscal year 2011, when the company has said it will spend about $4 billion. Part of that will go toward Apple's massive retail expansion plans in 2011, with 40 to 50 new stores expended to account for about $600 million.
Robert Cihra with Caris & Company issued a note to investors on Friday noting that Apple's growth is "stunning." He said the company has managed to effectively create its own growth through innovation, while its competitors are lost "in a sea of otherwise commoditized hardware."
In the December quarter, Cihra expects Apple to sell 6.7 million iPads. He has also projected the sale of 32 million iPads in fiscal year 2011, accounting for more growth in Apple's bottom line than the iPhone.
"A product that didn't even exist a year ago... now leads an entire charge to thin-client access/computing architecture," he wrote. He sees the iPad "igniting an explosion toward 'thin-client' access computing, with Apple's most extensible advantage its lightweight iOS software and apps ecosystem."
Cihra sees the iPhone accounting for more than 40 percent of Apple's fiscal year 2011 growth, with 64 million units sold. He also sees another 5 percent expansion in the company's bottom line thanks to the Mac platform, where he sees sales increasing 19 percent year over year.
Accordingly, Caris & Company has raised its price target for AAPL stock to $400, up from its previous projection of $375.
Looking forward, Cihra sees iOS becoming "one of the world's most pervasive operating systems," thanks to an estimated total of 157 million iOS devices sold to date at the end of calendar year 2010.
He also expects Apple to turn on its massive North Carolina data center soon to drive more cloud-based services. Cihra noted that Apple increased its capital expenditures more than 100 percent in fiscal year 2010, driven by non-retail store costs.
Apple plans to increase its capital expenses another 55 percent year over year in fiscal year 2011, when the company has said it will spend about $4 billion. Part of that will go toward Apple's massive retail expansion plans in 2011, with 40 to 50 new stores expended to account for about $600 million.
Comments
(forgive there being no silly comment about being first!)
That sounds a bit much but then again as the next generation iPad comes out who knows? As a share holder I welcome everything that makes Apple more valuable. As a Mac user I fear, perhaps erroneously, for my beloved Macs
(forgive there being no silly comment about being first!)
I can hardly wait to see what surprises the next gen iPad will bring to the table. Apple knows that it will have drive sales to new levels, I'm sure the market is not even close to being saturated. It'll be interesting to see if they keep gen one on the shelves at a lower price point; something tells me they won't for fear that it would cannibalize the new model.
(forgive there being no silly comment about DaHarder)
If you go to the super market and the noname cheese whiz is the same price has the brand name, your going to buy the real thing. To beat Apple, you must sell at a lower price, I would even say at a much lower price.
That makes me wonder if Apple owns some kind of patents for the ipad to prevent everyone, there mother and there pets from copying it. Apple made that category worked and now anyone can come in with cheap clones?
I can hardly wait to see what surprises the next gen iPad will bring to the table. Apple knows that it will have drive sales to new levels, I'm sure the market is not even close to being saturated. It'll be interesting to see if they keep gen one on the shelves at a lower price point; something tells me they won't for fear that it would cannibalize the new model.
(forgive there being no silly comment about DaHarder)
Agreed. I added a get out clause after you posted lol. (Who is DaHarder?)
Ipad competition needs to at least beat Apple prices. In Canada, the 16g Samsung Galaxie sells for 649$ while the ipad 3g sells for the same price.
If you go to the super market and the noname cheese whiz is the same price has the brand name, your going to buy the real thing. To beat Apple, you must sell at a lower price, I would even say at a much lower price.
That makes me wonder if Apple owns some kind of patents for the ipad to prevent everyone, there mother and there pets from copying it. Apple made that category worked and now anyone can come in with cheap clones?
Copying hardware 'cheaply' has been the key to fortunes in the PC market but they all had a level playing field when it came to the OS, peripherals and all else. This is a different game now, the iPad isn't just amazing hardware (and I think a lot of that is well protected by patents plus much of it is Apple's own) but about the OS and eco system. There is no way the clone makes can compete there so they are to put it politely, royally screwed IMHO.
Ipad competition needs to at least beat Apple prices. In Canada, the 16g Samsung Galaxie sells for 649$ while the ipad 3g sells for the same price.
If you go to the super market and the noname cheese whiz is the same price has the brand name, your going to buy the real thing. ...
Especially if the no-name cheese whiz is only 8oz. and the brand name is 16.
Copying hardware 'cheaply' has been the key to fortunes in the PC market but they all had a level playing field when it came to the OS, peripherals and all else. This is a different game now, the iPad isn't just amazing hardware (and I think a lot of that is well protected by patents plus much of it is Apple's own) but about the OS and eco system. There is no way the clone makes can compete there so they are to put it politely, royally screwed IMHO.
They've been royally screwed for a long time, only most people didn't know it. They have always been in a market where competition is fierce, margins are low, and they don't even get to determine how their products work. For their troubles, the lion's share of the profits go to Microsoft. During the '80s and '90s their awful situation was papered over by huge growth in the PC market. As soon as that tide receded, it became even more obvious that the Microsoft OEMs were in a miserable business. To make matters worse, diversification proved to be difficult because the business model they'd grown up with didn't supply them with the technical expertise required to make it work.
As for AAPL, I wish investors were more convinced of these iPad profit numbers. The stock has been stuck in a rut for two months.
I would probably play more games on my iPhone, specially the FPS type, if it had a D-pad type of attachment available for it. I wonder why no one has made a snap-on game controller attachment for the iPhone or iPod Touch?
They've been royally screwed for a long time, only most people didn't know it. They have always been in a market where competition is fierce, margins are low, and they don't even get to determine how their products work. For their troubles, the lion's share of the profits go to Microsoft. During the '80s and '90s their awful situation was papered over by huge growth in the PC market. As soon as that tide receded, it became even more obvious that the Microsoft OEMs were in a miserable business. To make matters worse, diversification proved to be difficult because the business model they'd grown up with didn't supply them with the technical expertise required to make it work.
As for AAPL, I wish investors were more convinced of these iPad profit numbers. The stock has been stuck in a rut for two months.
Yep with you 100%. It all makes me feel kind of warm and fuzzy now after all those years watching the MS game playing out the way you eloquently describe.
The stock picked up a tad a few weeks back going from the 300 rut to mid teens rut lol. I grabbed additional 100 shares at 301 (most of mine was obtain sub 100) so happy to see at least that margin. However I agree it is vastly under rated.
BTW I suspect success will breed more success where iPad is concerned as many bring out apps (magazines etc.) only for the iPad deciding why not concentrate on the winner thus reinforcing that fact.
They almost make it look easy. Apple sure is enjoying the fruits of spectacular product design and engineering and value pricing!
As for AAPL, I wish investors were more convinced of these iPad profit numbers. The stock has been stuck in a rut for two months.
Apple has increased 13.82% since Oct.4t/10 (278.64) ..... if that's being "stuck in a rut for two months" ....... I'm all for it. DJI = +5.51% .... Nasdaq = +10.29% .... Maybe your standards are a tad high ???
... To make matters worse, diversification proved to be difficult because the business model they'd grown up with didn't supply them with the technical expertise required to make it work.
As for AAPL, I wish investors were more convinced of these iPad profit numbers. The stock has been stuck in a rut for two months.
Yup. Pee cee makers' only innovation is in cutting corners to reduce costs. They are all trying to push each other off the low-margin cliff of doom.
I think the ultimate solution for Dell and for HP's pee cee division is to be absorbed by Chinese manufacturers. That will be the next major cost-cutting "innovation" since it will eliminate all those overpaid Americans from the payroll.
And as for AAPL stock not moving for two months, just look at Microsoft's stock. It hasn't moved for 10 YEARS.
Seems to me that it would be hard to project profit growth for the iPhone without knowing that! Can I assume that they are assuming yes?
(I say this not to criticize AT&T--I'm plenty happy and have been with them for a decade--but I literally know a dozen people who will buy a verizon iPhone if one comes out in a few months. I don't know all that many people, so it is another small sample size, but still...)
Copying hardware 'cheaply' has been the key to fortunes in the PC market but they all had a level playing field when it came to the OS, peripherals and all else. This is a different game now, the iPad isn't just amazing hardware (and I think a lot of that is well protected by patents plus much of it is Apple's own) but about the OS and eco system. There is no way the clone makes can compete there so they are to put it politely, royally screwed IMHO.
"Prince McLean" a writer whose stuff is normally interesting but I don't always agree with wrote this on his personal site:
People want the iPad, not because its a tablet, but because it offers a strong development platform with an easy to use interface, one that cuts out the complexity and bother of a full sized PC
and
All of the vendors who have promised tablet devices […] are in for a surprise when they find out that the tablet market doesn’t actually exist. It’s the iPad market, and it involves being able to run iPad apps.
I have to say I do agree with these couple of quotes. It has become increasingly obvious over the last year that iPad is Apple's vision of future computing: an application playing console where you get in, do productive/fun/creative stuff (delete as applicable) and get out.
Apple has increased 13.82% since Oct.4t/10 (278.64) ..... if that's being "stuck in a rut for two months" ....... I'm all for it. DJI = +5.51% .... Nasdaq = +10.29% .... Maybe your standards are a tad high ???
Sorry for using round numbers. Six weeks, to be more precise. AAPL closed at $318 on October 18. Since then, it has literally gone nowhere. It has notably underperformed this week. In a week when the NASDAQ was up 3% and the S&P was up nearly 4%, AAPL rose just 1%. So it's not a question of standards, it's just a somewhat worrying trend, seeing AAPL stuck in a rut and pacing substantially behind the broader market in the short term.
And as for AAPL stock not moving for two months, just look at Microsoft's stock. It hasn't moved for 10 YEARS.
For a reason, and that reason is called earnings growth. Why AAPL is stuck and has fallen behind the broader market this week defies reasoning. But then, the market often does.