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Apple Is Most Valuable Company on Earth: Analysts
Published: Tuesday, 8 Feb 2011 | 12:25 PM ET
By: John Melloy
Executive Producer, Fast Money
Analysts have had three weeks since Apple [AAPL 355.3503 3.4703 (+0.99%)] reported its best quarter ever to breakdown the results and the verdict is finally in: Apple should be the most valuable company on earth.
Since the Jan. 18 report where Apple said it sold a record 16 million iPhones last quarter and nearly doubled the sales of iPads, at least five firms have raised their 12-month forecast on the stock to an average price of $467, or a 32 percent increase from here. At that level, Apple’s market value would total $433.7 billion, flying past Exxon Mobil’s current market value of $423.2 billion.
After underestimating iPhone and iPad sales for the last year, analysts as a group have ratcheted their numbers up for Apple this year more than any other technology company, according to analysis by Bespoke Investment Group.
“iPhone sales are tracking above our last forecast, triggering an upward revision in our forecast of phone sales going forward,” wrote Charles Wolf, an analyst for Needham, in a report yesterday that placed a $450 price target on the stock. “While the increase in iPhone sales in our new model was relatively modest, it nonetheless added $50 to our price target because of the profitability of the phone. The migration of feature phone users to smartphones accelerated in the second half of 2010, suggesting that even our new forecast could prove to be conservative.”
The catalyst driving the most bullishness is the launch of the iPhone on the Verizon [VZ 36.19 0.17 (+0.47%) ] network this Thursday.
“Our monthly channel checks indicated continued strong sales of the iPhone4, as it remained by far the top-selling smartphone at AT&T [T 27.83 -0.13 (-0.46%) ],” wrote Canaccord Genuity’s Michael Walkley, who raised his price target on Apple today to $460. “Further, our checks indicated Verizon is planning for strong demand for the CDMA iPhone4 launch.”
Apple Inc.(AAPL)
355.36 3.48 (+0.99%%)
NASDAQ
Apple’s stock hit a new all-time high today of $355.12, valuing it at $326.6 billion. Three other analysts have raised their price targets on the stock since its earnings report. RBC raised it to $425 from $395 and increased estimates. Caris & Co. upped its forecast to $450 from $430 citing iPad sales. And the biggest bull, Ticonderoga Securities, slapped a $550 target on Apple, citing future sales in China.
“The Verizon iPhone is being underestimated in my opinion,” said Josh Brown, money manager and author of the popular Reformed Broker blog. “Also, the tablet game is only in the 2nd inning. Reminds me of Dell Computer in 1996 - estimates wouldn't catch up until a couple of years later.”
It hasn’t all been up arrows for the stock this year. Apple shares plunged 6 percent on a day in early January after CEO Steve Jobs said he would take a medical leave of absence, leaving COO Tim Cook in charge. Also, bears cite the coming threat of tablets powered by Google’s-Android.
But bulls say Apple will remain the gold standard for tablets in consumers’ eyes, has only begun to crack the international market for its products and has a strong executive bench to continue expanding the ‘Halo’ created by Steve Jobs.
“Analysts are as giddy as you can be, but Apple just keeps surpassing those numbers,” said Pete Najarian, co-founder of TradeMonster.com and a ‘Fast Money’ trader.
http://www.cnbc.com/id/41473211/
Yo, Lisa!
Hasn't been anything to complain about for a while now.
All cylinders, as they say.
All time high close. Not bad, AAPL, not bad.
Not bad at all.
Verizon iPhone: A 'voracious appetite for Apple products'
By Frank Michael Russell
frussell@mercurynews.com
Posted: 02/04/2011 01:59:07 PM PST
Updated: 02/04/2011 01:59:20 PM PST
Today: An analyst says demand for the Verizon iPhone helps justify a higher stock price for Apple.
First-day sales for the iPhone 4 by Verizon Wireless customers show strong "pent-up demand" for the device, an industry analyst noted today.
"We believe this speaks to the potential trajectory of demand with Verizon in 2011," Ticonderoga Securities analyst Brian White wrote in an e-mail.
"This also provides just another example of why we believe the voracious appetite for Apple products is not yet reflected in the stock price," noted White, who has set a 12-month price target of $550 for Apple shares.
Verizon Wireless revealed this morning that it has suspended early sales for the iPhone 4. First-day sales Thursday were limited to the carrier's current customers. "In just our first two hours, we had already sold more phones than any first-day launch in our history," Verizon Wireless CEO Dan Mead said in a news release.
Verizon and Apple intend to resume sales on their websites Wednesday. According to Apple's site, customers can reserve a phone for pickup Thursday. In-person sales will begin at 7 a.m. Thursday at Apple and Verizon stores. The phone also will be sold at Best Buy and some Wal-Mart stores.
According to uSamp, a Los Angeles market research company that conducts online surveys, an estimated 26 percent of AT&T iPhone customers intend to switch to Verizon as soon as they can. The firm also found strong interest among Verizon's BlackBerry and Android for switching to the iPhone.
Apple stock finished regular trading today at $346.50, up $3.06, or 0.9 percent, from Thursday's closing price. Verizon Communications -- which owns 55 percent of Verizon Wireless -- dropped 7 cents, or 0.2 percent, to $36.31.
Bearish Apple Bets Decline Most in Year as Investors Drop Puts
January 25, 2011, 11:52 AM EST
Jan. 25 (Bloomberg) -- Bearish bets against Apple Inc. fell the most in a year yesterday as investors let put options expire after the iPhone maker reported record sales last week.
By Cecile Vannucci and Jeff Kearns
Outstanding puts to sell Apple stock fell 50 percent to 563,304 yesterday, the largest decrease since January 2010, as investors allowed bearish positions to expire instead of renewing them using contracts with longer maturities. That pushed the ratio of existing puts to calls down to 0.82 from a 16-month high of 0.99-to-1 last week.
“People were concerned for a pullback, but they didn’t roll” their positions into longer-dated ones, said Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options-market analytics. “If people were concerned in general, they would have rolled them. Now it’s back to normal.” Rolling the positions would mean investors were still betting Apple would decline in coming months.
Apple sales gained 71 percent to a record $26.7 billion in the fiscal first quarter, the company said last week, as customers bought iPhone 4s, iPads and new MacBook Air laptops. Revenue would have risen more had the company been able to build more iPhones, Chief Financial Officer Peter Oppenheimer said. The results indicate that Apple will perform well even as Chief Executive Officer Steve Jobs takes medical leaves and Chief Operating Officer Tim Cook handles day-to-day operations, said Bill Kreher, an analyst at Edward Jones.
Stock’s Gains
Apple gained 0.4 percent to $338.80 as of 11:25 a.m. in New York. Cupertino, California-based Apple advanced 67 percent in the past year, more than the 19 percent increase in the Standard & Poor’s 500 Information Technology Index.
Put open interest jumped to 1.13 million on Jan. 21, the most since August 2008, while call open interest jumped to 1.15 million, the highest since January 2009. The subsequent decrease came as this month’s options expired at the end of last week. Exchange-traded U.S. equity options tied to stocks and indexes expire on the third Friday of each month.
Calls give the right to buy 100 shares of a security for a certain amount, the strike price, by a set date. Puts convey the right to sell. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will rise or fall.
Pixelmator Grosses $1 Million on the Mac App Store
Tuesday, 25 January 2011. Posted by Saulius.
I am ecstatic to announce that Pixelmator grossed a gigantic $1 million on the Mac App Store. And that happened in only 20 short days.
What is even better is that the app is getting rave reviews on the Mac App Store (4.5 stars with over 275 ratings on the US store, 5 stars with over 128 ratings in the UK, and 4.5 stars with over 129 ratings in Germany). And, thanks to the Mac App Store, more people than ever are choosing to download Pixelmator.
Such an amazing success feels fantastic. Thank you so much for your enthusiastic support.
We can’t wait to hit your Macs and the Mac App Store shelves with the hot new updates (1.6.5, 1.7 Geneva and the outstanding Pixelmator 2.0) that are currently in the works.
http://www.pixelmator.com/weblog/2011/01/25/pixelmator-grosses-1-million-on-the-mac-app-store/#comments?r44b=no
Makes you wonder how much Apple's own Aperture took in?
Apple's blow-out quarter: The bloggers called it, the Street blew it
Posted by Philip Elmer-DeWitt
January 19, 2011 8:05 AM
In the quarterly battle between outsiders and the insiders, it's the amateurs by a mile
Amateurs in blue, pros in peach.
This one wasn't even close.
In our ranking of the best and worst Apple (AAPL) analysts for Q1 2011, which lists them based on how accurately they predicted seven key numbers -- revenue, earnings, gross margins and unit sales -- the unaffiliated analysts (blue in the chart at right) took 9 out of the 10 top spots.
The bottom 20 spots were all held by professionals working for the banks and brokerage houses. Taken as a whole, the numbers they sent their paying clients were off by a margin (9.04%) more than twice as big as those generated by the guys who do it for free (3.94%).
They included some spectacular misses:
Needham's Charlie Wolf, who underestimated Apple's revenues by $3.73 billion and its iPad sales by more than 2 million units
Sterne Agee's Vijay Rakesh, who predicted that Apple would sell 7.95 million fewer iPods than they did.
Morgan Keegan's Travis McCourt, who missed Apple's earnings by $1.79 a share and its iPhone sales by 2.24 million units.
On the blogger side, special mention goes to:
Financial Alchemist's Turley Muller, who missed Apple's EPS by just one penny.
Traderhood's Nicholas Mihalache, whose estimate for Apple's revenue number was off by only 0.27% and who missed its iPad unit sales number by 0.76%
Apple Gold's Dennis Hildebrand, who nailed Apple's gross margin.
Apple Finance Board's Alexis Cabot, whose iPod estimate was off by only 60,000 units.
And finally to Patrick Smellie, also of AFB, who didn't nail any individual number, but who was close enough on all of them to take the No. 1 spot overall.
Below, our Earnings Smackdown spreadsheet, annotated to show the best three and the worst three predictions in each category.
Green: best estimate. Red: worst. Light green: 2nd or 3rd best. Pink: 2nd or 3rd worst.
http://tech.fortune.cnn.com/2011/01/19/apples-blow-out-quarter-the-bloggers-called-it-the-street-blew-it-2/
Steve Jobs and the miracle of Cupertino
MarketWatch
12:13 PM ET
SEATTLE (MarketWatch) -- Apple announced stellar fourth-quarter earnings on Tuesday in a report that was tinged with sadness over reports of its founder's ebbing health. The company's amazing journey over the past three decades reminds us of the mythic Greek story of Marathon, in which a triumphant long-distance runner falls exhausted into the arms of a grateful city after completing an epic task.
The success of virtually every arm of Apple in the past quarter has been detailed elsewhere, but what jumped out at me was how different this could all have turned out. The company's commercial victories were anything but pre-ordained, and if you swing the clock back 10 years I don't know of many people who would have forecast that mercurial chief executive Steve Jobs would one day lead the second most valuable firm in the United States, after energy giant ExxonMobil .
Think about it: Back in the mid-1990s, the most innovative and exciting mobile phone company, by a mile, was Nokia . Slaughtered since. The next most important mobile communications company was Motorola . Buried. The most important chip provider was Intel . Dead in the water. The most important personal computer maker was Dell . Dead in the water too. Microsoft ? Better, but not by much.
So how did the Apple miracle occur? You have to point to one man, and that is Jobs, who may have sacrificed his well being to bring his company to this height. Strip away the numbers, and what's left is one person's vision, taste, engineering, ambition and charm that created two multibillion-dollar success stories -- animated film maker Pixar, sold to Disney awhile ago, was the other -- that defied conventional wisdom and Wall Street expectations at every turn.
Of course, it wasn't always this way. Apple was an also-ran for almost 20 years, spending most of the 1990s and the first half of the 2000s in investors' dog house. If you just started to invest in the past five years, it may be hard for you to imagine but Apple for years was always like the loner, snooty, hipster kid at school that the in crowd mocked.
Sure the artists loved Apple's pretty white boxes and graphics software, and cooed about the long-haired, ethereal Jobs at the helm. But as a company and as a stock it could never get any respect. It seemed like whenever Apple did manage to bring out a product that looked promising, it could never produce enough of them, fast enough, to have its design prowess turn into earnings growth.
Investors shunned the stock, and, by 2001, it was actually trading for less than the value of the cash on its books. I will never forget running into a friend who was one of Jobs' marketing geniuses that same summer. We were taking a break from cycling on Lake Washington Boulevard and as we downed espressos he lam ented that he could not figure out why Wall Street would not give the company credit for all that it had accomplished throughout the years. The Street literally determined that Apple was worth more dead than alive.
My friend said he thought that Wall Street's perception would change once they saw a new project that they were working on. He couldn't tell me any details but he hinted that it was a new type of MP3 player. I nodded my head appreciatively, but in my mind I had the consensus view: Even if Apple did turn out to have some secret weapon, you could count on them to screw up the manufacturing or the supply chain.
Well that device turned out to be the iPod, and if you think about it now it's amazing that the company started its surge to the top ranks of American business with a little white device that only played music. There were a lot of player competitors at the time, but the iPod was different enough to catch your eye. The capacity was larger, it was easier to operate and it just felt very cool.
Suddenly Apple would be out of the domain of art directors and put its impeccable taste in the hands of consumers. That was Jobs' vision, and that was his contribution. He had a vision that design mattered, and that consumers would beat a path to his door if he could manufacture and market beautiful objects that performed a useful function at an affordable price. The brilliant effort to disintermediate the music industry from the album-selling process was another stroke of genius, as the 99-cent song and iTunes formed the foundation of the iPod franchise.
It actually took a long time for investors to appreciate this vision, and Apple shares did not start to take off until 2004. The reason was that people remained skeptical that Apple could match manufacturing and distribution prowess to its design success. After the company managed to bring out successive iPod models on time and without a hitch, shares broke out over their all-time high in early 2005, and then it was off to the races.
The iPhone came along in 2007, and the initial reaction was muted. Wireless pundits could not figure out why Apple would want to take on the handheld device world which was low margin and packed with dozens of competitors. But again Jobs' design vision -- one button?! -- and marketing cunning won the day with consumers, and the company's newfound ability to manufacture in Asia effectively won the respect of its Wall Street critics. The cycle of skepticism, cynicism and then awe has been played out repeatedly now with successive Apple products, as the iPad was subjected to the same doubts.
Now investors apparently assume that Apple is a one-man show, with a single individual guiding every aspect of this product development, operations and marketing. This makes sense, since Jobs has been the man out front all this time.
But insiders report that Tim Cook has been running the retail and operational show behind the scenes for more than five years now, and that Jonathan Ive continues to be the design genius most responsible for the engineering for which Jobs gets credit. They are confident that Jobs -- while irreplaceable -- has prepared the company for his eventual exit, which has been expected for the past half-decade since he was diagnosed with cancer.
Jobs will go down in the history books as the equal of Thomas Alva Edison, who founded General Electric; Henry Ford, who founded Ford Motor; John D. Rockefeller, who founded Standard Oil; and J.P. Morgan, who started a certain eponymous bank. None of these gentleman had their success handed to them on a silver platter, but persevered with a vision and business proposition that was uniquely suited to their times.
Cheap lights, cheap cars, cheap gas, cheap money -- and now cheap music and not-so-cheap, but still beautiful and ubiquitous, mobile communications and entertainment. All these companies survived their founder, and so will Apple.
In the meantime, we are lucky to have had an opportunity to witness Jobs emerge, grow and cast his spell in our lifetimes, and I certainly wish him a speedy recovery. And as for the stock, well, Apple has been one of the few great holds of the past few years. Yet it also regularly provides new entry points. The next buying opportunity should emerge this quarter.
Apple "firing on all cylinders" says Jobs
Posted by Philip Elmer-DeWitt
January 18, 2011 5:01 PM
Profits up 78%, revenues 71%. 16.2 million iPhones, 7.4 million iPads crushed expectations
Source: Google Finance
Steve Jobs' health problems were all but forgotten as Apple (AAPL) reported all-time record earnings Tuesday afternoon. The stock, which lost $7.83 during the day, quickly jumped more than $11 in after hours trading.
Sales for nearly every Apple product blew past analysts' expectations, but sales of iPads and iPhones were particularly strong.
"We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales," said Steve Jobs in a prepared statement. "We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can't wait to get their hands on."
The numbers:
Sales: $26.74 billion, up 70.05% year over year
Profits: $6.43 billion, up 75.2%
EPS: $6.43, up 77.6%
iPhone: 16.24 million units, up 85.8%
iPad: 7.33 million units, compared with Wall St. consensus of 6.15 million
Mac: 4.13 million units, up 22.9%
iPod: 19.45 million units, down 7.3%
iPod touch: more than 50% of total iPod sales
Gross margin: 38.5%, compared with guidance of 36%
Revenue guidance for Q2: $22 billion
EPS guidance for Q2: $4.90
Apple stores: $12 million average revenue per store, up 69% from Q4
Cash and marketable securities: $59.7 billion, up from $51 billion in Q4.
"Net-Net: Apple pulls off a Holiday Hat Trick," wrote RBC Capital's Mike Abramsky in a quick note to clients. "Large iPad beat, with iPhones and Macs meeting high expectations. Margins very strong."
Yeah, probably not going to be pretty.
Another all time high. Tuesday should be interesting!
CHART OF THE DAY: Why Apple's iPhone War With Google Is Just Beginning
Dan Frommer | Jan. 14, 2011, 10:15 AM SAI Business Insider
Apple's iPhone war against Google Android was the big story in tech last year, with Android growing like a weed to beat Apple in U.S. market share.
But in reality, we haven't actually seen a real competition between the iPhone and Android yet. Not within the major carriers, at least. (Carriers are still by far the most important phone distributors in the U.S.)
That is going to change now that Verizon will start selling the iPhone next month, and now that AT&T is going to start offering more Android devices. And by the end of the year, we will have a much better sense of which phones people like better -- at both major carriers.
As of late 2010, the iPhone was the major platform at AT&T, representing 63% of its smartphone customers. At Verizon, Android and RIM basically split the pie.
We'll see where these numbers are in another year. Will Verizon users flock to Apple's iPhone? Or will Android's wide variety of different devices win the market? And what happens to RIM?
Oh noes, not another all time high!
Q4 PC Sales Miss Gartner Est.; Apple Up 24% In U.S.
By Tiernan Ray
Global personal computer shipments in Q4 rose 3.1%, year over year, in unit terms, to 93.5 million PCs, Gartner reported this afternoon. That was below the 4.8% growth the firm had projected for Q4.
Holiday PC sales were weak, said analyst Mikako Kitagawa. Some of that was due to competition from tablet computers, game machines, and other consumer electronic devices.
Hewlett-Packard (HPQ) led the pack with 18.8% market share, but its shipments fell 1.2%, year over year. Taiwan’s Acer Group saw shipments fall 1.8%, and claimed 12.7% of the total. Dell (DELL) gained 3.9% in shipments, for an 11.6% share. Lenovo gained a whopping 21.4%, for a 10% share. Toshiba was fifth with 5.7% share, up 1.6%.
And preliminary PC numbers in the U.S. showed Apple (AAPL) jumped from 7.4% of total shipments a year earlier to 9.7% in Q4, a 24% rise, the largest unit shipment increase of any vendor in U.S. data. HP lost 6%, Dell lost 6.1%, Acer lost 30% in the U.S. market, and Toshiba gained 14.4%. At 10.3%, Toshiba is just slightly ahead of Apple in fourth place.
This morning, Goldman Sachs increased its EPS estimates on shares of Apple through 2012 as its latest distribution deal with Verizon should help sales. With the higher earnings estimates, Goldman maintained its buy rating and set a price target of $430 per share.
In afternoon trading, shares of Apple were higher, picking up 0.5% on the news.
$344.42 New All Time High eom
Forbes: The Top 25 Most Profitable Growth Companies In The U.S. (Apple #8)
Apple (AAPL)
EVA Momentum Rank: 8
5-year Cumulative EVA Momentum: 66.0%
Trailing Four Quarters Sales: $65.23 billion
5-year Cumulative Total Return: 340.5%
http://www.forbes.com/2011/01/11/top-25-most-profitable-growth-companies-intelligent-investing_slide_9.html
$350 tomorrow if Verizon is for real? Why not?
Kinda makes you wonder how much we'd be up if the market were having a good day.
Apple’s Mac App Store Opens for Business
CUPERTINO, California—January 6, 2011—Apple® today announced that the Mac® App Store? is now open for business with more than 1,000 free and paid apps. The Mac App Store brings the revolutionary App Store experience to the Mac, so you can find great new apps, buy them using your iTunes® account, download and install them in just one step. The Mac App Store is available for Snow Leopard® users through Software Update as part of Mac OS® X v10.6.6.
“With more than 1,000 apps, the Mac App Store is off to a great start,” said Steve Jobs, Apple’s CEO. “We think users are going to love this innovative new way to discover and buy their favorite apps.”
The Mac App Store offers apps in Education, Games, Graphics & Design, Lifestyle, Productivity, Utilities and other categories. Users can browse new and noteworthy apps, find out what’s hot, see staff favorites, search categories and look up top charts for paid and free apps, as well as user ratings and reviews.
Entirely new apps, as well as current Mac favorites, are available from developers such as Autodesk, Ancestry.com and Boinx. iPhoto®, iMovie® and GarageBand® apps from Apple’s popular iLife® ‘11 suite are available individually in the Mac App Store for $14.99 each, and Pages®, Keynote® and Numbers® apps from iWork® are available for $19.99 each. Aperture® 3, Apple’s powerful photo editing and management software, is available for $79.99.
“We’re delighted to bring our professional-grade paint and drawing app, Autodesk SketchBook Pro, to the Mac App Store on its first day of launch,” said Carl Bass, Autodesk’s CEO. “We’ve seen tremendous success on the Mac, iPhone and iPad with multiple apps. We’re excited to offer SketchBook Pro on the Mac App Store so artists can easily create everything from quick sketches to high-quality artwork right on their Macs.”
“By offering the Ancestry.com Family Tree Maker app on the Mac App Store, we’re making it even easier for people to discover and access their family history,” said Tim Sullivan, Ancestry.com’s CEO. “The Mac App Store will drive a new generation of innovation on the Mac platform.”
“We’re thrilled to have our award-winning animation, video production and photography software available on the new Mac App Store,” said Oliver Breidenbach, Boinx Software’s CEO. “The Mac App Store makes it easier than ever for consumers to access all the innovative software designed for the Mac.”
To get the Mac App Store, download the Mac OS X v10.6.6 Software Update or visit www.apple.com/mac/app-store. To find out more about developing for the Mac App Store visit developer.apple.com/programs/mac.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.
CES: “Most Tablets Are Junk,” Analyst Contends
Eric Savitz
TECH MUSINGS
Jan. 4 2011 - 4:09 pm | 2,220 views
Just because of every company on Earth is jumping into the tablet computer space doesn’t mean that everyone now has the market figured out.
Indeed, Wedge Partners analyst Brian Blair declares flatly in a research note today that, in fact, “most tablets are junk.”
Blair writes that history will count April, 2010, as the birth of the modern tablet, and 2011 the year that everyone else jumped on board to the trend. But he contends that the Apple(AAPL) iPad “thus far remains the only game in town largely because many of the tablets hitting the market are junk, for lack of a better word.”
Blair asserts that most tablets “are underpowered, poorly constructed and largely not ready for prime time…CES this week will showcase more junky tablets and many will fall by the wayside and be largely forgotten about the time we get to the holiday season in the fall.” Blair says he’s looking out for offerings that are actually competitive with the iPad. And they’re coming, he says.
Blair notes that the Samsung Galaxy Tab has been the best marketed and most worthy competitor so far; but he notes that the price of the device has been cut by $100 at many retailers, “suggesting sales have been lackluster.” Most of the new entrants, he contends, are 7-inch models based on Android that are “closer to smart phones in their overall offerings.” At CES this week, more than 20 new models will be unveiled, Blair writes – and that is probably a conservative estimate.
Blair contends the two biggest variable for the market will be the timing of the debut of the Honeycomb version of Google’s (GOOG) Android, and the market reception for pending offerings from HP (HPQ) and Research in Motion (RIMM). Honeycomb, he says, will allow creation of 10-inch Android-based tablets that he thinks will compete more directly with the iPad. (Motorola Mobility (MMI) is expected to unveil a Honeycomb based tablet tomorrow.) The HP and RIMM tablets, he adds, will “give us a sense of whether there is room in the tablet space for more than two operating systems. He adds that Microsoft is also likely to make a play for the market, but adds “we aren’t hopeful for them.”
Blair has three suggestions on how to play the trend: Apple, Broadcom(BRCM), which suppliers a variety of chips to tablet makers, and Nvidia(NVDA), which he asserts is “garnering the lion’s share of the designs for Android-based tablets based on Honeycomb.
Read comprehensive coverage of CES from Forbes at http://blogs.forbes.com/topics/ces/
'Can Apple maintain profitability?' Yes.
by Kelly Guimont (RSS feed) on Jan 4th 2011 at 10:00AM
Seriously? This is the question of the day? When people are still voicing serious and legitimate concerns about the rest of the economy? We're talking about a company with enough money in the bank to make a Goldman Sachs-sized investment in Facebook if it wanted to, more than triple the amount Dell had in the bank at the end of the last quarter, plus more than five times the amount HP had too, while we're at it.
Let's look at a number for a minute: Apple has 51 billion dollars in cash. That's 51,000,000,000 bucks. Or, approximately the amount of money it takes to fill a vault-slash-swimming-pool. Who has that kind of money these days and didn't get it via government bailout? Apple, that's who. What is its secret? It made that money the old-fashioned way, by selling new-fashioned things.
In a time when few companies are profitable and everyone's excited about a flat line since it isn't a downward curve, Apple is making money iHand over iFist. One could presume from this that analysts and others who watch CNBC professionally would be excited about a company with growth and profitability in the current climate. However, that's not the case.
Remember when Apple wasn't doing well? Those bygone days when people may have actually believed the name of the company was "Beleaguered Apple Computer?" Well, once Uncle Steve made his return in 1996, that started to turn around. Apple Computer started making things that start with "i," and in 2001 with the launch of the iPod, Apple was officially cool again. You know, unless you were an analyst on Wall Street, in which case Apple wasn't cool, it was just less lame than before. But seriously, have you seen what sort of stock prices Dell and HP have these days? Now those are tech companies.
I call shenanigans! Now, instead of being impressed with profitability, the question is "Oh sure, you're all profitable, but can you stay that way?" Apple hasn't proven that yet? Explain to me how making ANY money in a time of unprecedented financial volatility is something that gets played down. What will it take before Apple gets a fair shake? A brand new device that sells a million units in three months? Try two and a half. A new version of the same thing released a year later, how long did that take to sell a million? Three days.
Find and replace "Apple" with a non-tech company in some of these articles and see if it still makes as much sense. Just the iPhone product line by itself is bigger than Coca-Cola, but Apple still gets dismissed like this?
Someone needs to have a little heart-to-heart talk with some of these guys. Apparently they've all had their heads down in their BlackBerrys for so long that they don't realize it's cool these days to carry around something Designed In Cupertino. Clearly a lot of other people have figured it out -- what's stopping Wall Street from seeing the light?
http://www.tuaw.com/2011/01/04/can-apple-maintain-profitability/
(Many embedded links in the above article.)
Is Apple the Rodney Dangerfield of tech companies?
Posted by Philip Elmer-DeWitt
January 3, 2011 7:57 AM
One of Wall Street's better analysts wonders why the stock don't get no respect
Photo: Jim Accordino via Wikimedia Commons
"Why does the market dislike Apple?" asks Oppenheim's Yair Reiner in a note to clients issued Monday. "It typically grants companies with 70% EPS growth and plenty of runway a premium valuation. Apple is valued at 14x (ex-cash)—like the S&P."
Reiner had earlier raised, and dismissed, the possibility that Apple's (AAPL) market cap -- at $295.89 billion the highest of any tech company -- might be scaring buyers away.
More likely, he says, is that with Google's (GOOG) Android grabbing market share, investors are secretly worried that Apple won't be able to sustain the iPhone's "all-important" price premium.
"If so," he concludes, "the more lasting consequence of an Apple-Verizon deal won't be the number of incremental iPhones sold, but that the scale of competition between iPhone and Android could tip sharply in Apple's favor. If so, Apple's earnings won't just rise from the additional Verizon units—they'll finally get some respect."
There is another possibility.
If pressure from Android means that the iPhones starts to generate a "more reasonable" gross margin of 40% (compared to its actual 55% and competitors' 28-38%), about a third of Apple's EPS, according to Reiner, "would go poof."
That's the worry, he says, but given the extraordinary stickiness of the iOS ecosystem and the likelihood that a Verizon (VZ) iPhone with take some of the wind out of Android's sails, Reiner is betting that the iPhone will continue to enjoy profit margins that are the envy of the industry.
He's raising his price target accordingly, to $385 from $345. He's also raised his Q1 2011 earnings estimate to $5.62 per share on revenue of $25.13 billion.
That's higher than any of the other 21 Wall Street analysts we've polled, but lower than most of the blogger-analysts.
We'll see who's right when Apple reports its fiscal first quarter earnings on Jan. 18.
http://tech.fortune.cnn.com/2011/01/03/is-apple-the-rodney-dangerfield-of-tech-companies/?section=magazines_fortune&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+rss/magazines_fortune+(Fortune+Magazine)
Piper Jaffray's top Apple analyst offers his annual product predictions
Image: moonbattery.com
Apple (AAPL) is unlikely to break into any new hardware categories in 2011, according to a note to clients issued Monday by Piper Jaffray's Gene Munster. But that doesn't mean the company won't have a busy year.
Here's what he sees as the major announcements of 2011:
95% probability: Launch of a Verizon (VZ) iPhone (before the end of March)
100%: Launch of the Mac App Store on Jan. 6 (this Thursday)
90%: iTunes cloud services (through Apple's new server farm in North Carolina)
100%: iPad geographic expansion (i.e. more countries)
80%: Carrier subsidies for the iPad
100%: Launch of OS X Lion (summer 2011)
Also on tap, he says, are the iPad 2 (spring), a fifth-generation iPhone (summer), refreshed iPods (fall) and probably some new MacBook Pros and iMacs in the first and second half of the year, respectively.
One more thing:
"For over a year," Munster writes, "we have believed that Apple will enter the television market by the end of CY12 at the earliest. While Apple's commitment to the living room remains a "hobby," we continue to believe the company will enter the TV market with a full focus, as an all-in-one Apple television could move the needle when connected TVs proliferate. We also expect Apple to increasingly focus on web services that leverage its connected device ecosystem (i.e. iTunes cloud service, MobileMe, etc.)."
AAPL Up To Start 2011
Stocks are starting 2011 with a lift this morning thanks to better than expected manufacturing news out of Europe. Shares of AAPL are on a tear, up nearly 2%. Upcoming catalysts for Apple include the launch of the Mac App Store this Thursday; monthly NPD data (Mac / iPod business); iPhone and iPad sales updates and carrier expansion (Verizon); new content revenue streams such as video, books, newspapers and social (Ping); moving iTunes into the cloud; and the uptake of the new Apple TV. Shares of Apple trade at 15x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).
Apple's iPad Likely Had A Blockbuster Holiday Season, According To Analysts (Fortune)
The iPad was no doubt on a lot of people’s holiday wish lists this year and analysts are predicting a blockbuster holiday season. Analysts estimate Apple sold between 5 million and 7.5 million units for this past quarter. Bill Shope of Goldman Sachs had the highest estimate with 7.54 million iPads sold while Daniel Ernst of Hudson Square had the lowest sales estimate of only 5 million units.
Tablet Sales Set To Skyrocket At The Expense Of PCs (All Things Digital)
Much as they were in 2010, tablet sales will be even more of a high point of 2011. According to Caris & Co. analyst Robert Cihra, tablet sales will more than triple, rising 226% to 54 million units. And of those, Cihra believes Apple will claim 67%. Which would spike iPad sales from around 14 million this year to 36 million in 2011. Meanwhile, PC growth (excluding tablets) is expected to drop from 14% this year to just 9% in 2011.
Apple To Rake In $2 Billion On Apps Alone In 2011 And That Might Be Conservative (TechCrunch)
According to Citibank, the iTunes App Store’s dominance won’t be slowing down anytime soon. In its U.S. Internet Stock 2011 Playbook, Citibank estimates that Apple will pull in up to $2 billion in gross revenue next year via the App Store. And if research firm Gartner’s forecasts are accurate, that number could be low. Gartner believes the global app market in 2010 totaled $4 billion, and that revenues will climb to a staggering $27 billion over the next two years.
Apple Will Hang On To 60% Of The Tablet Market (Barron's)
International Strategy and Investment Group analyst Abhey Lamba raised his price target on shares of Apple to $400 from $370, while reiterating a Buy rating. Results of a recent survey lead him to believe Apple will hold onto 60% of the tablet market in 2011. Lamba is modeling 27 million iPads to be sold by Apple in the fiscal year ending in September. His figure for the current quarter is 6.7 million units. Lamba is projecting 50 million units for the entire tablet industry this calendar year.
Holiday Sales Of The Galaxy Tab Can't Be Good With The $100 Price Cut (Droid Life)
Verizon is cutting the price of the Galaxy Tab to $500 contract-free. The $100 drop should take effect soon and will also include $60 of movie rentals from Blockbuster's app or Samsung's Media Hub. Anyone who bought the Android tablet within the past two weeks can get a refund for the price difference. Jay Yarow at Business Insider believes that this might suggest that holiday sales were less than stellar.
Verizon Allegedly Buys Domain Names, Yet Another Signal The Verizon iPhone Is On The Way (9To5Mac)
Although this is not a confirmation of the rumored Verizon iPhone, it looks like Verizon Wireless may have acquired the domain names iPhoneonVerizon.com and iPhoneforVerizon.com. Even if Verizon did purchase those domain names, this is no proof of a soon-launching Verizon iPhone as they could have purchased them for a later date or could have purchased them simply due to rumors and for potential traffic.
Confusion Over Apple As An Investment
I've noted with interest this past week's flurry of comments about Apple as an investment for 2011.
In my own equity strategy, which is outperforming the S&P for the year by roughly 25% to 11%, Apple would now be a holding in four of the currently active six portfolios. Apple trails the index slightly in two recently-formed portfolios, and outperforms in the other two.
While I can't predict with certainty, I'd expect that Apple will be part of the January 2011 equity portfolio, as well.
The nearby price chart for Apple, Google, Microsoft and the S&P500 Index reveals how dominantly the former has outperformed the latter three entities, Google and Microsoft being two of the more popular alternates in the technology sector.
What surprised me somewhat is how comparatively anemic Google's performance has been, when viewed with Apple's. The S&P's and Microsoft's track records for the past five years isn't all that unexpected.
Listening to many pundits, it's tempting to believe that Apple's performance is a purely technical feat, with a parabolic curve that must descend soon.
However, on the several bases in my quantitative equity portfolio selection process, Apple probably has some life left in it. Moreover, I've seen broad consensus on prior growth equities be wrong. For example, in 1998, Dell was viewed as overpriced and unable to sustain its then-torrid fundamental growth. It ended the year as one of the S&P500's top ten total return issues, so I was thrilled to have followed my portfolio selection process and held Dell for the entire year.
Ironically, as I observed back in the late 1990s, the bulk of the analyst community views equities in aggregates, often with some technical perspective. Thus, the individual merits of many attractive equities are lost amidst broad comparisons and conventional 'rules of thumb.'
Thank God for that.
As I consider why Apple, with its lofty share price and steady march upwards in price since January of 2009, may continue to outperform the S&P500, several reasons come to mind.
One, of course, is the firm's clear, successful focus on consistent innovation and evolution of well-received products. Those products have achieved high brand preference status. Additionally, they are typically in price ranges that have made them less vulnerable during the recent US recession and continuing economic weakness. With Steve Jobs' continued leadership, the firm may outperform expectations for a little while longer still.
And, finally, there's something which many investors fail to grasp. That is, even broadly-followed, popular firms can outperform. What is required is unexpected excellent performance. Firms like Microsoft, Dell, Kolhs, in the past, and, currently, Apple, have achieved this. It can never last forever, but it can often outlast ill-informed, generically-based expectations.
What Google does seems to be less unique with time, while Microsoft has been mismanaged for over a decade, with no sign of significant change in that important parameter.
The bottom line for me is that I don't subjectively select equities. But I can and often do interpret why my quantitative approach selects those equities which appear in portfolios. And from post hoc, informal inspection, it's easy for me to see why none of the recent portfolios have held Google or Microsoft, while many have included Apple.
http://pra-blog.blogspot.com/2010/12/confusion-over-apple-as-investment.html
Yeah, I know. Terrible ain't it!
$322.21. All Time Closing High. eom
Apple owns 66% of online music market, Amazon second at 13%
By Jacqui Cheng
Despite unrelenting competition from numerous online music vendors—particularly Amazon—iTunes has managed to actually increase its market share. The music service now makes up 66.2 percent of the online music market, according to new numbers from NPD, with Amazon coming in second with 13.3 percent for the third quarter of 2010.
iTunes has managed to increase its share from 63.2 percent earlier this year, even as Amazon has made aggressive efforts to chip away at iTunes' customer base and artist exclusives. In fact, Amazon was so good at pushing its "Daily Deal" promotions (deeply discounted albums of hot bands) that Apple apparently felt threatened by it—an anonymous music industry exec said earlier this year that Apple was stepping up pressure on artists to avoid Amazon's music promotions, lest they lose their valuable marketing support from iTunes.
It appears that iTunes' growth doesn't seem to have come at the expense of Amazon's, however. Amazon's share of the music market also increased from 11 percent earlier this year, when it was tied with Walmart for second place in the US. Both music stores are pulling ahead, likely because (at least according to a previous NPD report) the two stores cater to their own user bases.
The online music market as a whole has grown slightly over the past year, too: according to the latest Billboard numbers, 1 billion tracks have been sold in the US so far in 2010, an 0.3 percent increase from 2009. Even better, the sale of albums online has increased by 13 percent. But, like the music industry's UK counterparts, those increases have yet to make up for the the continued decline of CD sales in the US, which have dropped by 20 percent this year alone.
http://arstechnica.com/apple/news/2010/12/apple-owns-66-of-online-music-market-amazon-second-at-13.ars?utm_source=rss&utm_medium=rss&utm_campaign=rss
spitsong, you're replying to a post of yours that's more than three years old.
With everything that's currently going on in the tech world (smartphones, iPads, etc) you're obsessed with green underground transportation?
Do you realize where all the electricity for this stuff (including hybrid, plug in cars) comes from?
For the most part, coal-fired utility plants.
TANSTAAFL
Translated: There ain't no such thing as a free lunch.
Apple’s Gross Profit Double RIM and Motorola’s Combined for Mobile Phones
We wanted to take a quick look at how the gross margins for Apple’s (AAPL) iPhone compared to Research in Motion’s (RIMM) BlackBerry and Motorola’s (MOT) mobile phone business to see the marginal impact of each additional device sold by these companies. In other words, for each person that buys an iPhone or Blackberry, what does this contribute to the company? By looking at the individual sale, we can look past the R&D and total investment in each product for this exercise, which we acknowledge is a large component to most tech companies.
In just looking at gross margins for 2010, we estimate that Apple’s iPhone’s is around 49%, RIM’s Blackberry 35% and Motorola’s is approximately 28%. We derived these by using our estimates for the gross profit margins for the mobile phone divisions of each company.
Our result is that Apple’s iPhone generates just under $15 billion in gross profits, which is more than double our estimates for Motorola and RIM with just over $2 and 5 billion, respectively. Below we provide some reasons why Apple can earn roughly double per unit sold than two of its competitors.
2010 Mobile Phones Apple Motorola RIM
Market Share 3.7% 2.8% 3.7%
Units Sold 48.4 million 36.4 million 47.8 million
Pricing $606 $214 $305.1
Gross Margins 49% 28.6% 35.2%
Gross Profits $14.8 billion $2.2 billion $5.1 billion
Apple’s estimated $15 billion in iPhone gross profit is double that of the mobile phone operations of Motorola and RIM combined despite similar levels of market share — 3.7% for Apple, 2.8% for Motorola and 3.7% for RIM. This is largely due a much higher estimated average price for the iPhone, which is around $606 compared to an average of $214 for Motorola mobile phones and $305 for a Blackberry, according to the three companies. [1]
http://seekingalpha.com/article/242353-apples-gross-profit-double-rim-and-motorolas-combined-for-mobile-phones
Apple to Open Its Mac App Store in January
By NICK BILTON
Apple on Thursday announced that its Mac App Store is scheduled to open for business on Jan. 6.
In a company press release, Apple said the new store would “be available in 90 countries at launch and will feature paid and free apps in categories like Education, Games, Graphics & Design, Lifestyle, Productivity and Utilities.”
Steven P. Jobs, Apple’s chief executive, reiterated his hopes for the upcoming App Store, noting that he hoped to have the same impact with the distribution and creation of applications designed for a personal computer as Apple has had with mobile apps for the iPhone.
The new Mac App Store is expected to cause some strife for larger software companies, including Adobe and Microsoft, who will have to battle a new wave of app developers that can sell software through the new store, bypassing expensive traditional software distribution.
Apple said it planned to split the revenue from the store with developers, where Apple will take 30 percent and the other 70 percent goes to the software creator. For traditional staid software companies this might sound like a sour deal, but for smaller developers Apple seems to be offering a fair price to host, distribute and market the apps.
The store is expected to work in a similar fashion to the App store currently used on the iPhone, with some software available as a free download. It is unclear what the median price point will be for paid software. Currently the most popular paid mobile phone apps cost between $1 and $5.
Apple clearly plans to take full advantage of the Mac Store, as it noted in the announcement on its Web site. To start, Apple will make its own software available through the store, including Pages, Numbers, GarageBand and iPhoto. This software will cost between $15 and $30.
http://bits.blogs.nytimes.com/2010/12/16/apple-plans-mac-store-opening-in-early-january/?hp
Apparently a Goldman Sachs upgrade (they raised their target on Apple to $430 yesterday) ain't worth what it used to be.
catty, the only other one I remember off the top of my head is Royal Dutch Shell. But if you go to the link I included it has a Back button (upper right) that will walk you back through the other nine.
The asymmetric competition between Google and Apple app stores
DEC 8, ’10 3:31 PM
AUTHOR
Horace Dediu
In the latest version of Android, Google shifted from bitmaps to vector rendering for maps. The shift is probably more a function of available processing power on the device than a strategic shift to position value on the device rather than in the cloud. Vector maps, which are much more efficient in terms of bandwidth and local storage, have been the choice for in-car navigators but Google has always been using bitmap tiles which are fetched from a server and delivered only if the device is using a data connection. The downside for vectors is that they require a bit more local processing power.
I doubt that Google’s move to vectors is part of a shift to more app-centered/edge-of-network strategy.
HOW IS THIS RELEVANT?
Google has been riding a wave of re-centralization of value toward the center of the network as broadband made the cloud feasible. Keep in mind that Microsoft rode a wave of de-centralization as value moved to the PC and away from the mainframe. As intelligence was pushed to the edge, Microsoft accrued value from enabling the edge as a locus of productivity. This is no small thing.
Then came apps.
The supernova that is the App Store illuminated the possibility that apps are perhaps a “pushback” on the center. Like all good disruptions this was unforeseen: Apple built the store and the apps sold; by the billions. Apple joined the world in a scramble to react. Something profound was happening, but the very brightness of this explosive growth blinds us to what is actually going on.
My hypothesis is that there is a tug-of-war going on between the mobile cloud and the device-at-the-edge. Both will become better and neither is good enough. Technology roadmaps point to both higher availability of local storage/processing power as well as faster, cheaper and more ubiquitous mobile broadband. So technology insight by itself is not enough to give us a clue to the outcome.
What I would focus on is what is more natural for the user. Note that Twitter and Facebook both have better interfaces with their apps than they do with their browser interfaces. That and innovations in game interaction points out that apps are as much a disruption of UI metaphors as they are of the locus of power in the network. It would not surprise me if people end up spending a larger part of their lives tethered to device-enabled social media, “firing” the PC from the job of social interaction.
If we believe the app will grow as the preferred interface for the web (and I’m leaning in that direction) then the implications are potentially harmful to Google. Google does not “do” interfaces. Their strategic assumption has been that interfaces are commodities. The browser is the universal interface. Perhaps HTML5 will offer sustenance to the concept, but it’s not a panacea. Web apps have a long way to go to become competitive with hand-crafted app UIs. (While web apps have been possible for iPhone since its inception, developers vote en-masse for apps and almost zero popular web apps exist. Ditto for Flash-to-app interface ports.)
This brings us to focus on the asymmetry of business models.
THE APP INTERNET
What we end up with is the “app internet”: a potential disruption of the browser-as-interface and the re-integration of the user experience around the device. Because the iTunes store allows money to be attached to new interface innovations, developers follow and compete on better interfaces rather than on access to the back end. The asymmetry ensues from the fact that by attaching profit to the point where the user touches the screen, Apple took the basis of competition for developers away from the cloud.
In other words, the point where the electrical charge of the human skin is detected is suddenly the exact location of value capture from mobile computing.
Of course, Google is responding, but since they did not focus on seamless and curated experiences, developers are not seeing returns for investment in interfaces at the touch point. As a consequence, Google apps developers seek ad revenues. In turn, this is a road that leads to less innovation in interfaces and more innovation in network-dependent services.
I sense a distinct asymmetry in app trajectories between the platforms due to core business model choices. Asymmetric competition causes the great fortunes to be made and great fortunes to be lost.
http://www.asymco.com/2010/12/08/the-asymmetric-competition-between-google-and-apple-app-stores/
10 best stocks for 2011
11 of 11
Apple
Market cap: $284 billion
2009 Revenue: $43 billion
P/E ratio: 15.7
Dividend yield: N.A.
Ticker: AAPL
At $315 a share and up 47% for the year, Apple looks expensive. We thought so when we wrote about it in September. But after poring over Apple's recent financials, we're now convinced it's cheaper than it appears and that sales of the already hot iPhone and the iPad are set to go stratospheric. A concern we raised was Apple's vulnerability to a key misstep -- such as the iPhone 4 antenna problem that grabbed headlines this past summer. Yet during the July-to-September quarter, iPhone sales thrashed expectations, skyrocketing 91% vs. the same period last year.
What's astounding is that Apple did it with one hand tied behind its back. The iPhone isn't yet sold via the dominant wireless carriers in the U.S., China, Japan, and South Korea. Once Apple sheds exclusivity deals such as AT&T's in the U.S., iPhone sales should get a huge boost. Industrywide, smartphone sales increased 96% last quarter, according to Gartner Research. Apple's market share doubled in Canada and France once the top carriers started selling the iPhone.
Then there's the iPad. Apple sold 3.3 million of the tablet computers in its first three months, surpassing the debuts of both its own iPhone and the netbook category. Don't bet on a sophomore slump: Sales of iPhones and netbooks rose 246% and 155%, respectively, in their second year, says Bernstein Research.
Analysts predict Apple will earn $19.85 a share in the 2011 calendar year (up from $16.73 in 2010), which translates to a price/earnings ratio of 15.7. Sure, this is higher than the S&P 500's 13 P/E, but Apple's earnings have increased an average of 45% over the past three years, while the S&P's earnings have declined 4% per year.
Moreover, Apple's P/E is arguably inflated. Its free cash flow -- money actually flowing into company coffers -- is 14% higher than its reported net income, notes Bernstein analyst Toni Sacconaghi. Apple has over-reserved for U.S. taxes on foreign profits, but, according to Sacconaghi, the company is moving to reduce that, which will have the effect of boosting Apple's reported earnings and reducing its P/E. "The stock is definitely not overpriced," says Sacconaghi, "especially not for a company so well positioned in such fast-growing markets."
http://money.cnn.com/galleries/2010/pf/investing/1012/gallery.investors_guide_2011.fortune/11.html
iPad accounts for 8 percent of global mobile PC shipments
by David Quilty (RSS feed) on Dec 6th 2010 at 9:00PM
Apple is the number one mobile PC manufacturer in North America and third overall in the world, according to published results from research company DisplaySearch. While these rankings account for all of Apple's mobile computers combined, the iPad accounted for 8 percent of mobile computer shipments in the third quarter alone, a decent percentage of the 55 million mobile PC units shipped for the three month period. With the majority of these iPad sales going just to North America, Apple should increase that percentage once it pushes further into up-and-coming markets in Asia and the Middle East.
As for the worldwide rankings, Hewlett-Packard remained number one with 17.3 percent of the market share while Acer came in second with 16.5 percent. Apple finished third with 12.4 percent of the worldwide mobile PC market. However, as we noted earlier today, iPads may also be hurting netbook sales. HP and Acer are getting smaller than expected deliveries on hardware, meaning that their vendors may be clearing inventory. Could that be to make room for the more popular tablet PCs?
Report: Apple has cut a sweet deal with Verizon for the iPhone
Posted by Philip Elmer-DeWitt
December 6, 2010 9:29 AM
Verizon said to be eager to keep the hot-selling smartphone away from T-Mobile and Sprint
According to a report to clients issued Monday by Kaufman Bros.' Shaw Wu, Apple (AAPL) got the terms it wanted from Verizon (VZ) for the version of the iPhone expected to be released by the carrier in early 2011.
Citing industry and supply channel checks, Wu writes that he is "picking up that iPhone economics to Apple are likely to be favorable, similar to that offered by AT&T."
"This is important," he writes, "as many, including ourselves, have been concerned that VZ iPhone economics could be less favorable given the strength of Android and higher cost of components, particularly those associated with CDMA."
According to Wu, Apple's hand was strengthened by the 14.1 million iPhones sold last quarter, the share gains AT&T (T) made against Verizon over the past two quarters, and reports that Google's (GOOG) Android has started "to lose some of its luster" for Verizon.
"Last but not least," he concludes, "we are hearing that VZ does not want iPhone, the hottest selling smart phone, available on T-Mobile USA and/or Sprint and may be willing to pay for exclusivity to itself and AT&T."