Sunday, September 23rd 2018

The Apple iPad and its effect on the future AAPL stock price


Tuesday, February 2nd, 2010

I confess i am still enamored with my iPhone and felt at the time i purchased it in 2009 to be the most useful and innovative piece of mobile technology that actually made me want to use the device.

I seem to not be the only one; Apple has sold only 42.4 million iphones since 2007. In my retail outlet when i purchase it last year demand was estimated by the sales rep to be selling 75% versus other product. While that accuracy may be arbitrary it indicates how much of buzz and excitement there was about the iPhone.

So looking at the iPhone sales effect on the Apple Company it's obvious to see that perception translated into success. WSJ reports that In Apple's fiscal 2010 first quarter, ended Dec. 26, iPhone and related product revenues were $5.578 billion, 36% of Apple's total, compared with $4.45 billion for computers and $3.39 billion for iPod's.

Considering Apple historically has been associated with producing with MAC products, the result from its innovative products the IPhone and iPod have a highly significant impact on its revenues.

How significant? Apple's cash from operations has increased immensely to $5.8 billion in the latest quarter from $1.8 billion three years earlier.

This indicates that to Apple and its current and future stock price are highly impacted by its innovations.

This brings us to Apple's current innovation, last week Steve Jobs (Apple's CEO) revealed its latest product called the ‘iPad'.  A 9.7 inch color multi-touch display that looks similar to "a large iPhone"  as has been suggested by some in the tech community.

It is set to be priced at $499 for 16 gigabytes of storage, $599 for 32 GB and $699 for 64 GB (USD). So while the tech community is still mixed about the buzz of the iPad, many will still buy it. However the lack of buzz is certainly concerning considering the iPhone and iPad were iconic devices that have proved spectacular successes to Apple's revenue.

Even using a modest back on the envelope calculation in selling a modest 20 million units over the next few years is still another ten billion in revenue potential outside of its existing products. Thats on top of iPhone further potential to grow and the possible increases in demand as the recession in the US eases and over the world. So potential revenue increases seem likely over the next few years for the company.

For the time being Apple has been able to consistently produce consumer devices that have benefited its shareholders as the large jump in the stock price over the past few years have indicated. 

Will the iPad be as successful as the iPhone?, it depends on your definition of success. The iPhone and iPod were game changing devices that have had a major impact in their markets. The iPad will sell millions, it will be a useful consumer device, I will probably buy one. But will it sell more or make as much revenue as the iPhone or iPod, probably not but that's still successful to me.

 

Source:

http://online.wsj.com/article/SB40001424052748703906204575027262800098600.html?mod=WSJ_Stocks_MIDDLE_Heard

http://www.reuters.com/article/idUSTRE60Q64O20100127

 



Article by James Jones

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



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Tags: aapl, apple, apple stock, apple stock price, ipad, iphone, ipod

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