Apple Might Sell 156 Million iTVs In Its First Year, Doubling Stock

We’ve talked so much about the possibility of Apple(AAPL) shipping its own TV next year – let’s call it iTV – that it seems like old hat. However, according to some new research, there’s a reason that Tim Cook keeps saying

Apple is “very interested” in TV. It could be a massive opportunity for Apple which is already a massive company and stock.

According to a new proprietary study by Katy Huberty of Morgan Stanely (MS), Apple could sell 13 million TV sets next year at $1,060 each.

That’s almost $14 billion in revenues for next year and an extra $4.50 in EPS, according to her.

Just to put that in some perspective, the consensus estimate from analysts is that Apple will do $220 billion in revenues next year and $57 in EPS. So, if Huberty is right, those estimates would have to be bumped up 6% for revenues and 8% for EPS.

But wait. Her 13 million estimate was for the US only – and those were the people who said they were “extremely interested” in buying an Apple –branded TV set.

If you also include the 36% in her survey who were “somewhat interested” in buying the TVs, that’s an additional 43 million units.

And if you assume that Apple will sell 64% of its iTVs internationally vs. the US (which is what they did in Q2 of this year), there’s a good chance they could sell 156 million units in their first year after shipping instead of 13 million.

That suddenly increases the possible revenue opportunity for Apple from $14 billion to $168 billion next year. It also would suggest, using Huberty’s numbers, the incremental iTV sales could bring in not an extra $4.50 in EPS, but an extra $54 in EPS.

So, Apple’s next year revenues could be 76% higher than the consensus estimate and EPS could be 95% higher.

Those who owned at least one Apple device were nearly four times more interested in buying an iTV than those who did not. This is a big point I made in my Forbes post in March in which I predicted that Apple’s shares would go to $1,650 by the end of 2015: the 500 million iOS device users are going to be a huge proportion of the early adopters of iTV.

http://www.forbes.com/sites/ericjack...rtner=yahootix

Apple’s share price opened 3% down this morning on news that the iPhone 5 has had a pretty muted reception in China, where the device went on sale today.
Unlike the release of the iPhone 4s, no long lines of customers were seen queuing outside Apple’s seven retail stores in Beijing, Shanghai and Shenzhen.

Sina.com notes although the iPhone 5 could still become a popular product, Chinese consumers’ fever for the latest model has cooled as it offers few exciting upgrades from the earlier model.

"The iPhone 5 boosts no big innovations and is not very different from the iPhone 4s," said a woman surnamed Lou at an Apple store in Beijing’s Xidan shopping street. "I might wait for the next model."

Another woman surnamed Ye told Xinhua that she hopes Apple can come up with new models with major upgrades.

"The iPhone 5 is undeniably a good product. However, among the high-end smartphone category, it has a smaller screen and few bright spots, but has a high price," said Wang Yanhui, secretary general of the China Mobile Phone Alliance.

Multiple factors have worked against the iPhone 5 in China, including multiple competitors with bigger screens, faster network access and deals with China Mobile, the largest carrier in the world.

Apple’s share price recently took a knock after Nokia was able to make a deal with China Mobile for the Nokia Lumia 920T, while Apple was unable to for the iPhone 5. Currently Apple has lost nearly $200 billion in share holder value since their summer high, and appears to be handing back all the meteoric increases in their share price they gained this year so far.

Apple’s stock price will not get an effective boost unless it shows signs of unveiling products with major innovations, said Wang.

Money seems to be flowing from Apple to Nokia’s who’s shares are up 2.66% this morning and nearly 140% from their summer low of $1.63

The weather icon on the iPhone's homescreen always reads a pleasant 73 degrees and sunny. It has since the original iPhone was released, a comfortable, inoffensive temperature that matches the comfortable, inoffensive homescreen on iOS.

The prevailing opinion after the iPhone 5 announcement is that it's boring, but still pretty great. The hardware is without a doubt impressive from a technical and engineering standpoint, but iterative on previous designs. The software is as competent as we've come to expect from Apple. Together they make for a product that's not surprising — and therefore a little boring.

"Boring" doesn't quite encapsulate what's happening with the iPhone 5, though. The new iPhone is timid. Apple has taken very few — if any — real chances. It's a safe, pleasant, and sunny 73 degrees on the iPhone.

THOUGHTFUL, BEAUTIFUL, AND A WONDER OF MODERN ENGINEERING — BUT IT IS NOT RADICAL

As we noted in our hands-on with the iPhone 5, the thinner and taller design feels incredibly light yet still very sturdy. Apple has tossed in the usual assortment of spec bumps: a faster processor, improved camera, and a larger screen. That last item is a bigger change than usual for Apple, but it actually does very little with the extra space from a software perspective. Moreover, compared to the other smartphones, Apple's small adjustment in screen size still leaves its smartphone at the bottom end of the spectrum.

From a distance, it’s actually difficult to tell the iPhone 5 and the iPhone 4S apart. Phil Schiller told us that "The design language is an iteration, but otherwise this is a completely new phone." In a promotional video, Jony Ive explained the reticence towards radically changing the iPhone’s design:

When you think about your iPhone, it’s probably the object that you use most in your life. It’s the product that you have with you all the time. With this unique relationship people have with their iPhone, we take changing it really seriously. We don’t want to just make a new phone, we want to make a much better phone.
Apple wasn’t pursuing a bold, new design, it decided to take a safer approach. Scott Wilson, founder of Chicago-based studio MINIMAL — who's had a hand in the design of the Xbox 360, Dell Venue Pro, Microsoft Courier, and the TikTok and LunaTIK iPod nano watches — characterized Apple as "masters of refinement." He puts a positive spin on Apple’s conservative design decisions, saying that "you have to respect the restraint that the company has." The design of the iPhone 5 is thoughtful, beautiful, and a wonder of modern engineering — but it is not radical.

The most important part of the iPhone's physical design has always been its minimalism. It's primarily a window into the software, where all the action is on smartphones. While consistency has served Apple well when it comes to physical design of its products, on the software side it’s a little more complicated. If software is the main design element on modern smartphones — and it is — then we should be seeing Apple sweating each and every pixel just as it sweated each and every micron. Just try to close a dozen notifications on the iPhone and ask yourself if Apple is sweating the details.

THE IPHONE’S UI BASICS HAVE NEVER CHANGED

You can count the major UI changes that Apple has made to iOS on one hand: Folders, dock-based multitasking, universal search, the notification drop down, and Siri. In its five year history, iOS has seen smartphone competitors take radically different tacks on the core UI — webOS's multitasking cards, Android's widgets and stacked multitasking thumbnails, Windows Phone's active tiles, and even the upcoming BlackBerry 10's "flow" UI. Through it all, the iPhone’s UI basics have never changed; they invariably consist of a dock of 4 icons, a grid of icons above that, and lots of added features on the periphery.

Because Apple is sticking with its basic UI design, users are missing out in genuinely helpful and innovative ideas that can improve a smartphone experience. Swiping notifications away, widgets and tiles with live information, more intuitive and informative multitasking experiences — are all of these things really so disruptive to the iPhone's simplicity that they would put off new users?

Even if you don't compare iOS to other smartphone platforms, you can compare it to the third-party apps on iOS itself. There has been quite a lot of innovation in UI design and even a degree of consistency. Much of that consistency comes from Apple's own design guidelines, but a new trend has emerged across multiple flagship apps. Sliding panels, where you can swipe the main screen to the right to get a menu of options that lies "behind" it, has found its way into apps from Google, Facebook, Evernote, Path, and many more. It has quickly become a commonly understood and used UI model on iOS apps, but Apple hasn’t adopted it.

APPLE DOESN'T SEEM TO BE WILLING TO TAKE ANY RISKS AT ALL WITH THE CORE UI OF IOS

The innovation on third party UIs comes in part because developers have near total control over their UI in their apps, free to play around and try new things. Apple, however, doesn't seem to be willing to take any risks at all with the core UI of iOS. Why is that? It could be that the company still believes it nailed it with the iPhone's original UI, but perhaps there's a better explanation.

When Microsoft was at the height of its Windows dominance, it found itself caught in a cycle of sameness with Windows. The need to keep backwards compatibility and the fear that big changes would upset its user base led Microsoft to keep Windows looking the same and behaving the same. It packed on feature after feature, ultimately resulting in a confusing mess of mixed UI metaphors and arcane functionality. The trend culminated in Vista, where Microsoft tried to square the circle of innovating on UI while keeping app functionality the same. It didn't work, and because of the problems in Vista the OS was widely rejected.

SOME OF THAT OLD MICROSOFTIAN "DON’T MESS WITH SUCCESS" MYOPIA SEEMS TO HAVE AFFECTED APPLE

Apple has supplanted Microsoft as both the biggest and the most influential company in consumer electronics and technology. Like Microsoft in the 90s and early 2000s, it is taking a very conservative approach to updating its core UI in the name of accessibility and consistency. Apple is keeping the iPhone in a very familiar and safe zone, but does it really need to? It’s risky, taking something that’s massively successful and trying something new and different with it. Most companies don’t do it, but Apple has a reputation built making those kinds of bets. Perhaps it doesn’t deserve that reputation anymore.

We could really dig into some of the aggravating parts of iOS 6 — and there are plenty of them — to try to draw a direct parallel to Vista, but that would be disingenuous. To be very clear, the iPhone 5 won't be Apple’s Vista moment. Unlike Vista, it will work and be successful. Some of that old Microsoftian "don’t mess with success" myopia seems to have affected Apple, though. Success and innovation are not the same thing, and once a company stops driving for continuous innovation, it can be a difficult trait to rekindle should business ever slow. Just ask Microsoft, which has spent years rebooting Windows 8 and Windows Phone 8.

THE FASTER YOU GO, THE HARDER IT IS TO TURN

The success of the iPhone has moved at breakneck speed and with every new version it has only accelerated. The faster you go, the harder it is to turn. In that context, it makes sense for Apple to play it safe when it comes to design, both from a hardware and a software perspective.

But we’ve seen where the road of not innovating OS design goes, and Apple may find that the road is shorter than it thinks.

Record China sales for Apple’s iPhone 5

Apple sold over 2m units of its new iPhone 5 in its first weekend on sale in China, a record for the company’s smartphone in potentially its biggest market.

The news could provide a much needed boost for shares in Apple when the market opens in New York on Monday. The stock has fallen more than 25 per cent in the past three months partly because of concerns that growth in iPhone and iPad sales will not be sustained.

The iPhone 5 went on sale on Friday in China, online and at Apple’s retail store, with the carriers China Unicom and China Telecom also selling the handset.

“Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China,” said Tim Cook, Apple CEO, in a statement.

Apple did not release comparable three-day sales figures for the iPhone 4S, the 5’s predecessor, which went on sale in January. The iPhone 4 went on sale in China in September 2010, before its online store opened that October and China Telecom began supporting the iPhone in the first quarter of this year.

China Mobile, the largest carrier in China with nearly 700m subscribers and a 65 per cent market share, does not currently support the iPhone, but analysts expect Apple to strike a deal with the carrier by late 2013.

Analysts at UBS had said that some of their Chinese sources did not expect the iPhone 5 to do as well as the 4S. There was no queue outside Apple’s Shanghai store when it opened on Friday.

But China Unicom reported more than 300,000 online reservations for the phone earlier this month, with the city of Beijing along with Guangdong and Shandong provinces leading demand, ahead of Shanghai.

Apple shipped around 3.3m iPhones into China in the third quarter, according to Gartner, a technology research company, down from 5.7m in the first quarter.

Analysts at Stifel Nicolaus expect Apple to ship 49m iPhones globally this quarter. Apple says the iPhone 5, launched on September 21, will be available in more than 100 countries by the end of December – its fastest ever rollout.

http://www.ft.com/cms/s/0/aa66fdc4-4...#axzz2FHNx93j0

AAPL: ‘Going to Hover’ but ‘Headed for $425,’ Says Gundlach

Noted bond investor Jeff Gundlach, who has been taking some aggressive short positions on Apple (AAPL) in past, was on CNBC just now to say that he thinks the stock, today off $1.47 at $547.56, is “in a consolidation period.”

“I was on a show on CNBC back around November 19th, when Apple hit a short-term bottom, when it hit a short-term bottom, when it kissed 500 bucks and closed at about $525.”

“I think we’re going to hover around this level as long as the stock market stays locally reasonably strong,” advised Gundlach, while reiterating the view he offered on the channel before, to wit, “I deeply believe, though, that Apple is headed to $425 per share.”

“Not because I’m a bond guy, or a stock guy, because I’m a market guy. I’ve been around for a long time, and I know that when something goes vertical, like Apple stock did from $425, once the bubble pops, it goes back down to the point at which it lifted off, and that’s about $425.”

The discussion of Apple starts at about 5:08 in the video below.

http://blogs.barrons.com/techtraderd...says-gundlach/

We haven't heard much about iPhone 5 sales since it first launched this past fall, but according to The Wall Street Journal, the device has received "weaker-than-expected demand." The newspaper cites people familiar with the matter who say that Apple has cut its orders for iPhone 5 parts. The only explicit example of such cuts is that orders for displays during the January to March period have been slashed in half, according to sources. Only one source is cited as saying that the order decrease expands beyond screens.

It's important to note that a drop in part orders does not necessarily mean that iPhone 5 sales are disappointing. Apple could be prepping for a new model and it already has all the components it needs until it's released, or the company could be switching part suppliers. However, a separate report from Nikkei corroborates that iPhone 5 screen makers Sharp and Japan Display have had their orders for displays cut in half during the first calendar quarter. According to the report, Apple had planned to source a total of 65 million displays from the two companies during that period, but that number has been reduced "in response to lower than planned global sales of Apple's iPhone 5." Nikkei adds that Apple previously took on "more than half of the investment costs" at one of two Japan Display factories that manufactures screens for the iPhone 5. LG is Apple's other major manufacturer of iPhone 5 displays, behind Sharp and Japan Display, but it isn't clear that its orders have also sustained cuts.

Trip Chowdhry of Global Equities Research today writes that the worries about rumored supply-chain cuts in Apple‘s iPhone production are overdone because the cuts pertain to a change of technology, not a change in demand patterns, in his opinion.

Chowdry, reiterating an Overweight rating on Apple shares and a $650 price target, argues Apple has been shifting from using traditional displays to instead use the emerging semiconductor technology “IZGO,” a compound semiconductor process made up of indium, gallium, and zinc-oxide.

Sharp Electronics, the pioneer in the technology, talked about it extensively last week at the Consumer Electronics Show in Las Vegas. At its booth at the convention center, the company showed off some first IGZO-based smartphones, which are selling solely in Japan at the moment. They did, indeed, have lovely displays, based on my casual examination of the phones. Sharp reps suggest such devices get days of standby despite greater brightness and resolution, thanks to lower battery use.

Chowdhry is convinced by what he saw at CES, and other trade-show events, that Apple is in fact moving to IGZO:Apple had already switched its devices from traditional “amorphous-silicon” technology used in conventional displays of the organic LED (OLED) and LED-backlit type, to something called “low-temperature poly-silicon,” or LTPS, which has much higher “carrier mobility” of electrons, making feasible sharper, faster displays. However, “LTPS is very expensive because it requires additional manufacturing steps, it is difficult to achieve film uniformity in large panels (hence, sizes of LTPS panels do not exceed 3 square meters), and also the manufacturing yields are low.”

IGZO will solve all that for Apple, most importantly because it’s simpler to make, but it will also allow Apple to produce devices with “flexible,” meaning bendable, displays, as “the deposition happens at room temperature” in the IGZO manufacturing process.

http://blogs.barrons.com/techtraderd...obal-equities/

Last night on CNBC, widely-followed market timer Tom DeMark told hosts that the bottom was in for Apple stock, which has been subjected to a vicious selloff over the past several months.

DeMark uses a number of indicators for market timing, and he told CNBC they are all aligning strongly in Apple's favor:DeMark told CNBC that his firm turned bearish on Apple right at the top, and the price action in the stock since then is more or less what they would have expected:http://www.businessinsider.com/tom-d...n-apple-2013-1