Apple (APPL) is likely to have a strong 2010 driven by the forthcoming iTablet, expansion of the iPhone platform through Verizon, firmer iPhone sales in Europe and China, strong Mac unit sales, and better than expected iPod sales, which although declining, should be boosted by the Nano. In addition, Apple is likely to split the stock this year.
According to the Financial Times, Apple is scheduled to make a major announcement on January 26, and the wisdom is that they will announce a tablet device and major upgrades to their iTunes functionality including print media support (competition for Kindle) and gaming support.
The Tablet, we believe, will retail for approximately $600 and Apple could sell 1.5 million incremental units, meaning without cannibalization of existing products. That's an incremental $900 million in revenues and at a 35% margin, an extra 20 cents to earnings. We would be buying the stock into January 26 and then take some profits on the day of the announcement.
We think competition from Google in 2010 will be relatively muted but acknowledge that Google could become an issue a few years out. For that matter, Google will be an issue for most Tech companies in the next few years - Google is the proverbial elephant in the room. Google is still our favorite Tech company but we believe Apple's stock price could likely outperform Google this year. See more on Google at tmtanalyst.com. We also like Microsoft.
Sunday, January 3, 2010
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Google will be a bigger threat and much earlier than you think.
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