Reuters reports this morning that LG cannot keep up with Apple demand for iPad displays.
The fact that they are constrained in the short run is old news that they will not catch up until 2011 is a big deal.
During their earnings Call Apple was asked several times in different ways about the nature of the current pipeline contstraints of both iPad and iPhone 4s. And while they would not say when they will get demand/supply in balance I for one left the call with the impression that there were no particular issues that would prevent a reasonably short term ramp to a much bigger number.
Tim Cook...
Both of these products, the iPad and specifically the iPhone 4, we had backlog at the end of last quarter that we were not able to fill. And currently, we are still selling both of those products as fast as we can make them. So we still are quoting longer lead times than we like and we’re looking around the clock to try to get supply and demand at balance.
Early in the questions Tim Cook mentioned that they targeted a million iPads a month for the launch but have been blown away by demand. Why did no one ask the question... How blown away? 1 million 2 million? So we know they are making more but not likely MANY more than 1mm a month right now and LG is saying they are nog going to be able to meet Apples current demands until Q2 2011. Isn't that when V2 will be out with the magical retina display and front facing face time camera?
Again Tim Cook
because if it turns out that the iPad cannibalizes PCs then I think it's fantastic for us, because there is a lot PCs to cannibalize. It's still a big market.
I took this comment initially as a little snarky but when you take it at face value it is indicative that Tim Cook believes it is at least possible that the iPad becomes a truly transformative device that ultimately (in a much later version) replaces the PC
off topic a little, ok a lot. Why did not a single analyst ask about Apples Cash position? I know we are going to get a crap answer but at least ask. More on this later.
Showing posts with label iPad. Show all posts
Showing posts with label iPad. Show all posts
Friday, July 23, 2010
Wednesday, July 21, 2010
Flipboard: an Electric Motor in a Steam Powered World
I do not write about APPs. I am just not drawn to reviews. So this is not a review per-se That said... What is cool about Flipbook is what it represents. Innovation. I downloaded Flipboard and spent like 10 minutes just flipping the page back and forth. It is just so frickin cool. It is not a finished product but that is beside the point.
When the first electric motors came into use they were used to replace water/steam power in mills. Mills were designed and optimized over time to make effective use of centralized power. So when electric motors came along the only way people saw to use them was as a substitute for the water power. It was years and years before factories and equipment began to be designed around the unique qualities of the new type of motor.
The iPad is an electric motor in a water and steam powered world and Flipboard is the most obvious example I have seen yet of what the future will bring. We have no idea what this platform will look like in 10 years time. All the existing magazines on the iPad.... Steam baby.
Look I am not saying Flipboard will survive or replace Wired/Time/People Magazines but something is going to. The vast majority of stuff that has been produced so far has been regressive,trying to recreate the experience you get with a paper magazine.
At its most basic Flipboard is an RSS/twitter/facebook reader that aggregates your social feeds in a very unique and pleasing way. The Tweets in your stream are presented with the entire content of the link for you to page thru. The feeling is very much like the serendipity of reading the sunday paper.
And it is "Made with Love in Palo Alto, California"
The Wow factor is strong with this one . Itunes Link, Macworld Review link
The writer has no affiliation with Flipboard or Palo Alto although both seem pretty cool. I am long Apple.
Tuesday, July 20, 2010
Apple Earnings Preview
Ben Vested
First I was going to do a bunch of tables and charts and then I was going to do some really cool finance voo-do all over it but then I found out Andy Zaky already did a fine job on that. Here. I did do a couple of charts you will find below.
This will be more information than you require (hat tip Hodgman) but here it is anyway. I follow Apple as a company because (within normal healthy adult limits) I love tech, Apples products, the way they go about their business and the fact that they are a large successful easy to follow company. I invest in them because in addition to all of those things, their business and the engine that drives their earnings can be understood. Look, GE is a great company but based on their published financial statements three PHD's with a Ouiji Board and a bag full of darts could not figure out what is going to happen next with the company.
Apple is simple by comparison. iPod, iPad, iPhone, Mac, and other stuff. Apple is unique in the hardware space in that they make coin... Apple is making money in two industries populated by companies fighting to do their best impression of Eastern Airlines (commodity out of business). Nokia by far the largest maker of mobile phones by unit sales is losing money. Dell the largest US maker of PC's has a 3% profit margin. Their relative performance in the stock market over the last 6 years tells the story.
Apple is a hardware company, and they win because they innovate. They refuse to compete on price and over time have produced time and again products that customers are willing to pay a premium for. Apples ability to grow in the future will be tied to this simple equation.
You can argue at the margins but something between 45-55% of the companies earnings this year will be derived from product classes that did not exist before June of 2007. iPhone came out in June 2007 and will have something over 20 billion in revenue this year. iPad just came out this year and already is lighting up the revenue meter it should represent ~8% of 2010 revenue.
Here are two charts that show both revenue growth AND the contribution to growth by product.
This is revenue growth in dollars broken out by product.
Note 2010 projections are from Andy's analysis, they are as likely to be right as any (a little optimistic) I used Apples presentation for products because It shows how the growth in Macintosh has been driven almost exclusively by laptops over the last 5 years, the last 12 months being an exception. I have written about this before but Apple OWNS the over 1,000 computer market. During a time when Dell and Asus are fighting over fifty bucks for a netbook Apple has been able to get the average price per unit for desktops to go up.
Iphone is obviously experiencing explosive growth as is iPad. What has been surprising about the iPhone is that three years after launch the iPhone has maintained a PPU of over 600 bucks. Estimated margins on iPhone are 60% so as the product mix moves towards iPhone Apples overall margin continues to expand.
This chart is the same data presented as a percentage. It is here that you can see the relative importance of new products as a percentage of earnings. The three big growing categories iPhone, iPad and Other music and related services (read this as APP store). This category is going to grow like Kudzu in July over the next few years.
Longer posts coming on the following
Apples Cash position. Apple is piling up cash at a rate that will force it to change its current accumulate cash forever strategy or not. Currently they have about 47 bucks a share in cash and short term securities. It is a stupid amount of cash that management cannot with rational argument hold onto given that they have zero debt and are continuing to accumulate cash at a rate of OVER 1 billion a month. More on this later.
What happens next. Apple will not make any new product announcements today but as sure as Microsoft will announce products that they will never make, the NEW is coming and it will be Magical and Revolutionary from a profitability standpoint .
Risks. Apple is now huge. a lot of the poor PR in the last year has had to do with this size. Size is also an issue in that they are running up against the law of large numbers in terms of their ability to grow. Exxon Mobil is the only US company with a larger Market Cap and in order to maintain its current growth rate would have to create 20 billion in revenue next year that it did not have this year. I am not saying it won't happen just pointing out that it is a big number. Life after Steve not a happy thought. There are others... Margins.
More after the announcements tomorrow.
The author of this post is long Apple but makes no recommendation for purchasing equity positions in the company. Your grown people make your own decisions. The author has no holdings of Eastern Air, Dell, Nokia or Greek sovereign debt.
First I was going to do a bunch of tables and charts and then I was going to do some really cool finance voo-do all over it but then I found out Andy Zaky already did a fine job on that. Here. I did do a couple of charts you will find below.
This will be more information than you require (hat tip Hodgman) but here it is anyway. I follow Apple as a company because (within normal healthy adult limits) I love tech, Apples products, the way they go about their business and the fact that they are a large successful easy to follow company. I invest in them because in addition to all of those things, their business and the engine that drives their earnings can be understood. Look, GE is a great company but based on their published financial statements three PHD's with a Ouiji Board and a bag full of darts could not figure out what is going to happen next with the company.
Apple is simple by comparison. iPod, iPad, iPhone, Mac, and other stuff. Apple is unique in the hardware space in that they make coin... Apple is making money in two industries populated by companies fighting to do their best impression of Eastern Airlines (commodity out of business). Nokia by far the largest maker of mobile phones by unit sales is losing money. Dell the largest US maker of PC's has a 3% profit margin. Their relative performance in the stock market over the last 6 years tells the story.
Apple is a hardware company, and they win because they innovate. They refuse to compete on price and over time have produced time and again products that customers are willing to pay a premium for. Apples ability to grow in the future will be tied to this simple equation.
You can argue at the margins but something between 45-55% of the companies earnings this year will be derived from product classes that did not exist before June of 2007. iPhone came out in June 2007 and will have something over 20 billion in revenue this year. iPad just came out this year and already is lighting up the revenue meter it should represent ~8% of 2010 revenue.
Here are two charts that show both revenue growth AND the contribution to growth by product.
This is revenue growth in dollars broken out by product.
Note 2010 projections are from Andy's analysis, they are as likely to be right as any (a little optimistic) I used Apples presentation for products because It shows how the growth in Macintosh has been driven almost exclusively by laptops over the last 5 years, the last 12 months being an exception. I have written about this before but Apple OWNS the over 1,000 computer market. During a time when Dell and Asus are fighting over fifty bucks for a netbook Apple has been able to get the average price per unit for desktops to go up.
Iphone is obviously experiencing explosive growth as is iPad. What has been surprising about the iPhone is that three years after launch the iPhone has maintained a PPU of over 600 bucks. Estimated margins on iPhone are 60% so as the product mix moves towards iPhone Apples overall margin continues to expand.
This chart is the same data presented as a percentage. It is here that you can see the relative importance of new products as a percentage of earnings. The three big growing categories iPhone, iPad and Other music and related services (read this as APP store). This category is going to grow like Kudzu in July over the next few years.
Longer posts coming on the following
Apples Cash position. Apple is piling up cash at a rate that will force it to change its current accumulate cash forever strategy or not. Currently they have about 47 bucks a share in cash and short term securities. It is a stupid amount of cash that management cannot with rational argument hold onto given that they have zero debt and are continuing to accumulate cash at a rate of OVER 1 billion a month. More on this later.
What happens next. Apple will not make any new product announcements today but as sure as Microsoft will announce products that they will never make, the NEW is coming and it will be Magical and Revolutionary from a profitability standpoint .
Risks. Apple is now huge. a lot of the poor PR in the last year has had to do with this size. Size is also an issue in that they are running up against the law of large numbers in terms of their ability to grow. Exxon Mobil is the only US company with a larger Market Cap and in order to maintain its current growth rate would have to create 20 billion in revenue next year that it did not have this year. I am not saying it won't happen just pointing out that it is a big number. Life after Steve not a happy thought. There are others... Margins.
More after the announcements tomorrow.
The author of this post is long Apple but makes no recommendation for purchasing equity positions in the company. Your grown people make your own decisions. The author has no holdings of Eastern Air, Dell, Nokia or Greek sovereign debt.
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