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28 January 2010
Apple Inc. (AAPL)
Digging into the iPad
■ iPad arrives: Apple launched its long-awaited tablet computing device yesterday.
Overall, many of the device’s features were in-line with expectations. The key
positive surprises were the price point (for both the device and data plans) and
the use of Apple-designed silicon. The key negative surprises included the lack
of a new OS capable of multi-tasking and no carrier partnerships beyond AT&T.
Overall, we were impressed with the device, and we believe Apple’s unique
pricing strategy expands the TAM for this product beyond our initial expectations.
In addition, as we discuss in this note, the upgrade pricing maximizes the margin
profile (and potential margin profile) in a manner we didn’t appreciate prior to the
launch. As a result of these assumptions, we now forecasting $54.40 billion and
$11.83 for FY10 revenues and EPS, versus $53.34 billion and $11.54 previously.
For CY10, we are looking for revenues and EPS of $56.74 billion and $12.38,
versus $54.33 billion and $11.67 previously. For FY11, we forecast revenues
and EPS of $62.31 billion and $13.64, versus $58.06 billion and $12.44
■ 2010 is looking pretty: With a macro recovery as a tailwind, we expect iPhone
and Mac share gains to continue to drive profit growth in coming quarters. The
iPad now adds a nice addition to these trends, and it further expands Apple’s
total available market oppo