Katy Huberty of Morgan Stanley
March 26, 2008
We view Apple’s building momentum in higher education as another key growth lever. In the near term, it sets the company up for a strong September quarter. Longer-term, we see an ‘aging phenomenon’ that will put Apple in a more mainstream market share position as students enter the work force."
February 27, 2008
R&D spending up 34% year over year and Jobs' air travel expenditures up 170% (3x the average over the prior six quarters).
The last spike in [Jobs'] plane expense was in the March 2007 quarter, ahead of the iPhone launch. Steve Jobs is integral to negotiations with international carriers and supply chain partners.
We’ve always thought of the US market as Apple's most profitable segment. Given improved demand and mix, Europe and Japan are now as, or more, profitable than Apple’s US and retail segments."
January 25, 2008
Apple R&D grew faster in the last three quarters than at any time in the company’s recent history. This line item has proven to be a clear indicator of future product cycles that drive fundamentals and stock performance.
Ultimately, future product cycles are key to stock performance and we view late Spring/Summer as the next potential timeframe for announcements. While macro concerns may prove an overhang in the near-term, investors should take advantage of pullbacks to build positions over the next three months - ahead of March quarter results and potential mid-year product announcements."
October 12, 2007
We continue to believe Street estimates understate the true operating margin potential of Apple’s business. In the near-term, component costs aren’t nearly the headwind many feared. Longer-term, Leopard OS launch, increased store revenue, AT&T payments and accessories sales on a much larger installed base are all likely to drive margins higher.
We are now assuming an incremental $150 per iPhone payment from AT&T (in addition to $5 per month service revenue sharing) and $75 of accessories revenue (vs. $30 in the old model).
Furthermore, Apple was the only major PC vendor that did not experience a slowdown in unit growth during the month of August. We believe this is a function of its higher income customer and product that stands out in what is otherwise a commoditized market.
We view Apple’s powerful brand, distribution and customer experience engine as key to driving incremental revenue growth. Operating leverage is central to our thesis, as operating expenses scale over a larger revenue base and Apple’s retail stores drive improved margins."
Morgan Stanley raised its price target on AAPL to $180 from $150.
Rebecca Runkle of Morgan Stanley
December 13, 2006
While we view the supplier list, build forecast and exact launch timing as dynamic over the next month, our recent supply chain conversations give us high conviction in a [first half 2007] iPhone launch. We expect Steve Jobs to announce the iPhone at Macworld or in a separate event early next year.
To date, we've found two models that began initial production this month; a $599 4 GB and $649 8 GB version with capacity plans to build up to 12 million total units in 2007. We assume a slightly lower list price to be conservative.
The
iPhone is announced at Macworld on Jan 9, 2007. Two models will be released in
June; a 4GB model for $499 and an 8GB model for $599.
Runkle expects the iPhone will:
- have a full screen 3.5" LCD
3.5"
320 by 480 at 160 ppi
- be approximately 4/10" thick.
0.46
inches thick
- include a virtual click-wheel/soft-touch design.
Multi-touch
- be a bit wider than the iPod nano
iPhone
is 2.4" wide vs 1.6" nano width
- be thinner than the current video iPod.
Same
width as 30/80GB iPod (2.4")
- sport a metal casing design similar to the iPod nano and be available in multiple colors including black, white, silver and possibly others.
Metal
casing.
Black
and metallic casing. No other colors.
- digital audio and video playback.
Plays
music, audiobooks, videos, TV shows, and movies.
- likely be carried by Cingular.
Cingular
will be the exclusive carrier. 2 year contract required.
March 20, 2006
We expect new products as early as April with another round in late Summer/early Fall. In particular, we look for a large screen video iPod, full length feature film content, additional Intel-based Macs and an Apple-branded phone."
No
large screen video iPod released in 2006.
No
Apple branded phone in 2006.
Full
length feature films available on iTunes.
December 16, 2005
We continue to believe demand outstrips supply for iPods and that Apple is doing the best it can to supply both its own and traditional retail stores.
To hone in on this point, more people plan to buy an iPod this holiday season than a cell phone. Also interesting, more people plan to buy iTunes gift cards this season than non-iPod branded MP3 players.
We think this speaks wonders on iPod brand loyalty and ultimately ties consumers into an expanding portfolio of Apple products. Of the current MP3 player owners planning to buy an iPod this holiday, 40% currently own a non-iPod MP3 player, a sign of additional iPod market share traction.
We believe this provides evidence that management of digital content in the living room is important to consumers and could drive incremental demand this coming year.
Apple management agrees its US retail footprint isn’t maxed out at the 135+ stores today. While market demand, product execution and competitive dynamics will all impact the rate of growth and ultimate number of Apple retail stores, an analysis of similar retail chains suggests a number in the 300-400 store range is a fair target.
Apple hasn’t confirmed its phone strategy (or even acknowledged that one exists), but at our recent meeting management did suggest a) handset makers will eventually get an MP3 offering right and b) Apple’s strategy is to be an innovation leader."
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