Neil Hughes
Apple is bucking industry trends and outperforming its peers by creating its own growth through hardware and software innovation — an aggressive strategy that one analyst believes could lead to Apple phasing out the $400 iPad 2.
Rob Cihra with Evercore Partners said in a note to investors this week that he sees Apple phasing out the current iPad 2, because Apple's overall vision calls for "clearer product tiers." The prediction comes as Apple is expected to lower the barrier to entry of its iPad lineup by unveiling a new, smaller iPad next Tuesday.
Cihra believes Apple will sell around 7 million so-called "iPad mini" units in the December quarter. Along with the full-size iPad, he sees Apple selling a total of 26 million units in the holiday shopping season.
In his view, Apple is leveraging its engineering expertise in both hardware and software to "pull dollars away from otherwise commodity markets and incumbent competitors." Apple's calendar year 2012 revenues are up 30 percent year over year, while the broader PC market has dropped 4 percent this year.
Further bolstered by sales of 49 million iPhones, Apple is expected by Cihra to post $56.1 billion in revenue during the December quarter, amounting to $16.33 in earnings per share.
Prior to that anticipated blockbuster quarter, Apple will report results for its just-concluded September quarter. For that three-month frame, Cihra believes Apple sold 27 million iPhones, 17 million iPads, 4.9 million Macs and 5.7 million iPods, resulting in revenue of $36.5 billion and earnings per share of $9.03.
His numbers are slightly above Wall Street consensus for the September quarter, as other analysts on average seek $36.4 billion in revenue and $8.93 earnings per share.
Evercore Partners has reiterated its overweight rating for AAPL stock, as well as a target price of $800.
William Gallagher
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
19 Comments
I think 7M smaller iPads is low, 49M iPhones is high and if phasing out the iPad2 could signal the smaller iPad to be $400-ish.
@philboogie I agree that 7 million iPad Minis is on the low side. Probably closer to 10 million. However 49 million sounds about right. As long as they can get supply higher. 37 million iPhones sold last holiday quarter, and demand for the 5 is greater. I think pricing will be $249-599. That would be perfect.
That would make complete sense. It's obvious that the reduced price iPad 2 was just there to extend into a lower price point and with the iPad Mini on its way, there's really no need to keep it around. A starting point for an iPad Mini at around $249 (still speculation at this point) and extending into the lower range of the full-sized iPad will fit perfectly and offer a nice range of choices. At the same time, it will make people question buying a $200 Fire (or other cheapo Android tablet) when for only a little bit more, they can get the real thing.
Phasing out of the iPad 2 is surely on the cards, so I'm not sure it's news to report the one analyst who simply stated the obvious. It would only confuse buyers -- not Apple's style. They might keep it until Xmas, but I'd be surprised.
Gee, this analyst must have read my post here over a month ago (when the iPad mini rumors started) that the iPad mini would replace the iPad 2 and that Apple continued the iPad 2 simply as a stop-gap until the mini was ready. Maybe I should get a cut of his paycheck for this particular analysis. :D