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Apple Inc. (AAPL) iTV Could Double Apple’s Earnings Next Year

December 20th, 2012

For Apple (NASDAQ:AAPL) shareholders waiting for their beloved stock to recover, there’s good news and bad news. First the bad news: Unless or until Apple comes up with another hot product, the stock has likely put in its all time highs. The iPhone and iPad remain the leaders in their categories but the gap is closing and margins eventually will do the same.

Eric Jackson, founder of IronFire Capital says not to worry, help is on the way in the form of the long-awaited Apple Television. Citing the work of Morgan Stanley analyst Katy Huberty, Jackson says Apple’s earnings could double just off iTV in the next two years.

Based on extensive consumer surveys Huberty estimates that Apple could sell 13 million TV sets at over $1,000 a piece within 12 months of introduction. That alone would add $14 billion to revenues and $4.50 to earnings. Therefore revenue and earnings estimates of $220 billion and $57 respectively, will have to be moved higher on a base case.


Jackson takes it another step further, noting that Huberty’s data was only based on U.S. consumers calling themselves “very interested” in buying an iTV unit. Expanding that to include those who are “somewhat interested” brings in an additional 43 million units. Assuming Apple continues to do 2/3 of its sales overseas bumps the total potential target market for iTV to as much as $168 billion in revenues and $54 dollars in earnings.

You can see the full “Breakout” interview below:


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  1. just a guest
    December 21st, 2012 at 02:36 | #1

    Apple TV will probably just be the same $99 set top box but with different software that allows you to buy channels ala carte. HBO for $12/ month. ESPN for $8, etc. If it is an expensive piece of glass, it will likely be subsidized by Verizon (sound familiar?) with a 2 year contract. From a business standpoint it will be just like an iPhone, but on your wall. Buying ala carte channels will completely revolutionize the way we create and consume media. Think about this – It’s possible to shoot and edit an entire TV show with apple products. Just like there are free apps, there will be free channels. Get ready for an indie media revolution! Oh and of course AAPL will own all the advertising space. That’s where the real money is… Just wait. This will make selling 2 million iPhones in a weekend look like pocket change.

  2. Mike
    December 20th, 2012 at 23:14 | #2

    No one seems to understand once your price range goes from a $200 phone with contract or maybe 500-600 for an iPad, all the millions of teens and hipsters that buy Apple won’t be lining up to buy a 2k-3k tv and if they do, they’re parents will pay for it and will only buy one tv for the living room since they can all use it and watch tv together and not one iphone for each family member and a couple iPads. The more expensive (anywhere near 2k) Apple makes the product the less they will sell AND the less kids can show them off every place they go (mobility) the less important it will be to buy the new tv apple when it’s released in 6-12 months after older version and that IF they can somehow afford another 2k-3k. Look at how often people replace their macbooks and how much of their profit comes from their overpriced laptop anyway 10%-15%, even if it is a huge success, it’ll be a cliff that peaks and drops like a brick.

  3. Commenter
    December 20th, 2012 at 14:39 | #3

    Based on Apple’s pricing I don’t see how you can say they will have a $1000 TV. My guess is that it would be much higher than that.

    Android may hold 75% market but Apple’s margins KILL everyone else. Their market share compared to Android may be going down but they are still selling increased numbers of phones. And at the margins they have it’s unbelieveable how much money they are making. You are right though they need to come up with the next new thing and innovate or people will increasing look elsewhere. They have more cash than anyone for R&D so chances are they will do OK.

  4. Notafan
    December 20th, 2012 at 14:07 | #4

    “The iPhone and iPad remain the leaders in their categories” yet statistics show the Android holds 75% of the market while the IOS is only 14.9%. Apple is slipping fast as it unfortunately is no longer the “COOL” or “IT” phone of today. The companies business model is much like the failing Blackberry with only 1 new phone a year and poor to unsatisfying releases of newer models. I compare the IPhone to the Motorola Razor. IPhone = Razor, Iphone 2 = Razr2, Iphone 3 = Razor V3 Iphone 4 = Krazer, Roker and so on… Sadly, much like the Motorola of the past, Apple came out with 1 good idea but did not really improve opon the original.

    They came out in the past by making the MP3 player an iPod to many and then it moved onto the Cell Phone to an iPhone. I question if Apple can make a TV into iTV. They have tried with the Apple TV but that was a bomb. So if they plan to make a TV with the Apple TV built inside of it, I really dont see this going very well for them.

    “Based on extensive consumer surveys Huberty estimates that Apple could sell 13 million TV sets at over $1,000 a piece within 12 months of introduction.” Where was this survey done? $1000 for an unknown size and picture quality television all based on a brand is a bit far fetched.

    Good luck Apple but I see your stock dropping should this be your latest move.

    By the way how much profit is made from cell phone sales via APPLE? 70% and with the decline of their phone sales day by day… pushing for a TV set which most familys do not change year after year like a cell phone. Good luck!

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