Lion's AppleWatch

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"Attempting to analyze Apple through the general mediocrity of the industry they're part of, is just not the way to look at Apple..."

  Wednesday, December 9, 2009

Apple's recent stock drop not seen as cause for panic

Though AAPL stock has dropped 8 percent in the last 10 trading days, it's no cause for concern over the Mac maker's shares, one Wall Street analyst has said.

In his latest note to investors issued Tuesday afternoon, analyst Gene Munster of Piper Jaffray said Apple typically outperforms in the last four months of the year, up 43 percent, and underperforms in the first four months of the year, up 2 percent. This year, he said, investors are just taking their typical sell-off a little early, to capitalize on the strong gains of late '09.

In addition, he said shares may have, in years past, been driven up in December in anticipation of Apple's participation in the Macworld conference. The company's 2009 appearance was its last.

Munster said he remains confident that the December quarter will provide upside, driven by Mac, to reassure investors.

"There has been disagreement on the Street as to what has caused the recent slide in AAPL shares," he said. "We believe it is the cumulative effect of several seasonal and industry wide market forces at work."

Another factor in Apple's recent stock struggles: The ongoing ad war between Verizon and AT&T, and the recent launch of the Motorola Droid, also accompanied by an advertising blitz.

"Collectively, these competitive forces may have had a slight negative impact on consumer sentiment towards the iPhone," Munster said. "Also, large cap stocks GOOG, AMZN, QCOM and AAPL have each underperformed the market in the past 5 trading days." 2:09:16 PM    

Apple tablet set for spring launch?

Production is starting and should hit mass-market stride in February, says an analyst

Artist's rendition of an Apple tablet computer, with iPhone. Credit: AppleInsider

"The manufacturing cogs for the tablet are creaking into action," writes Oppenheimer's Yair Reiner in a note to clients issued Wednesday morning.

According to his supply chain sources, Apple (AAPL) appears to be gearing up to build as many as 1 million tablet computers per month. Assuming the company would need 5 or 6 weeks of inventory before going live, that suggests — barring production hiccups — a March or April 2010 launch.

Among the other "tidbits" Reiner says he's picked up:

  • Apple has settled on a 10.1-inch multi-touch display using the iPhone's LTPS LCD technology, not the considerably more expensive OLED technology suggested in earlier reports.
  • Apple has been approaching U.S. book publishers with what Reiner describes as "a very attractive proposal" for distributing their content: an App Store-type 30/70 split (30% for Apple) with no exclusivity requirement.
  • According to Reiner, publishers are disgruntled by Amazon's (AMZN) terms, which force exclusivity, disallow advertising and demand a "wolfish cut" of revenue. The typical Kindle/publisher split, he says, is 50/50, rising to 30/70 if Amazon gets exclusivity.
  • Apple's tablet would make ebooks more attractive for the education market by simplifying functions such as scribbling marginalia.

"We have not adjusted our model to show the impact of the tablet," Reiner concludes, "but we believe it will be substantial. Conservatively assuming 1M-1.5M units per quarter at an ASP of $1,000 and a corporate average net income margin of 22%, the tablet could contribute $0.25-$0.38 of incremental EPS per quarter."

An average selling price of $1,000 seems a little steep for the college market. But if Reiner is right about the timing, we'll find out soon enough. 2:03:18 PM    




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