Apple: A small fish in 3 very large ponds

A veteran Apple watcher raises his price target from $280 to $375 per share

Image: Orange Slice Training

A lot has changed since Needham's Charlie Wolf published his last Apple (AAPL) valuation back in February 2010, and in note to clients issued Monday he rattles off the things that have surprised him most:

• Explosive iPad sales. "We forecast that iPad sales would reach 20 million in 2019, the final year in our valuation exercise. iPad sales are already tracking over 12 million annually even before a full international rollout. Meanwhile, the device remains in chronic backlog."
• A shift in the Mac's trajectory. "Mac sales are tracking to 14 million units in calendar 2010, more than 50% higher than the number we previously forecast for the year."
• Rapid iPhone upgrades. "The recent iPhone 4 launch indicates that current iPhone owners are upgrading much faster than we previously assumed. This will increase total iPhone sales even as the installed base of iPhones grows roughly in line with our previous forecast."

Wolf has a model of Apple that assigns a value to each of the company's businesses — the iPod, iPhone, iPad, Mac, software and music -- and in which growth in Macintosh sales depends solely on the halo effects from the iPod and iPhone. What that model tells him is that Apple's shares should be trading at $375, not his previous target of $280 or Friday's closing price of $260.09.

"In our view," he writes, "Apple's market capitalization has the potential to exceed our estimate. That's because Apple is a small fish in three very large ponds."

The three ponds: the worldwide PC market (Mac has 4+%), the smartphone market (iPhone has 14%) and the tablet computer market (for now the iPad has it all to itself).

Below: Wolf's valuation model.

More

Posted in: Apple, Charlie Wolf, iPad, iPhone, Mac, Needham, Quarterly report

• How many iPods did Apple sell in Q2?

  The third in a series of previews of Apple's results for the second fiscal quarter of 2010

  Click to enlarge. Source: Company reports, Piper Jaffray

  Earlier this week we sampled the Street's expectations for Apple's (AAPL) iPhone and Mac sales in the fiscal quarter that ended on March 27.

  Today we look at the analysts' Q2 2010 estimates for a product line in transition: from simple MP3 players like the MORE

  Philip Elmer-DeWitt - Apr 15, 2010 7:55 AM ET
  Posted in: Analysts, Apple, iPod, iPod touch, Quarterly report

• How many Macs did Apple sell in Q2?

  The second in a series of previews of Apple's results for fiscal Q2 2010

  Click to enlarge. Source: Company reports

  On Tuesday we sampled analysts' expectations for Apple's (AAPL) iPhone sales in the fiscal quarter that ended on March 27. (See here).

  Today we look at Q2 2010 estimates for the company's second most important product line in terms of revenue: the Mac.

  As with the iPhone, there is a large range MORE

  Philip Elmer-DeWitt - Apr 14, 2010 8:15 AM ET
  Posted in: Analysts, Apple, Mac, Quarterly report

• How many iPhones did Apple sell? (Q2 2010)

  A preview of what analysts expect from next week's earnings report

  Click to enlarge. Source: Company reports

  The iPad may have dominated the Apple's (AAPL) headlines for the past three months, but it's likely that it contributed not a penny to the company's bottom line in its second fiscal quarter of 2010, which ended on Saturday, March 27.

  We won't learn the actual results until they are released on April 20, but MORE

  Philip Elmer-DeWitt - Apr 13, 2010 8:04 AM ET
  Posted in: Analysts, Apple, iPhone, Quarterly report

• Apple reports record earnings, hits Wall Street with double whammy

  Net income grew nearly 50% in Apple's most profitable quarter ever

  It seems no matter how high Wall Street's expectations these days, Apple (AAPL) still manages to blow past them.

  On Monday it hit the Street with a double whammy: not only did it announce record sales and earnings, but it changed the way it reports its iPhone sales revenue, replacing what used to be its GAAP (generally accepted accounting procedure) earnings MORE

  Philip Elmer-DeWitt - Jan 25, 2010 5:06 PM ET
  Posted in: Apple, Apple tablet, Earnings report, iPhone, iPod, iSlate, Mac, Peter Oppenheimer, Quarterly report, Steve Cook, Steve Jobs

• What the iPhone did for AT&T

  Sales are up. Churn is down. Wireless data revenue is pouring in.

  In the flat but better-than-expected third quarter earnings report AT&T (T) issued Thursday, most of the good news came from its wireless division via the iPhone.

  True its margins got squeezed -- as they do every quarter -- by heavy iPhone discounts and the bounty the carrier pays Apple (AAPL) for each device it sells. And its reputation continues MORE

  Philip Elmer-DeWitt - Oct 22, 2009 11:06 AM ET
  Posted in: Apple, AT&T, iPhone, Quarterly report

• Apple iPhone 3Gs: 9,190,680 and counting

  Here's bit of upbeat economic news to brighten a gloomy Monday.

  On Aug. 1, a London-based investor who calls himself "Tommo_UK" posted a message on The Mac Observer's Apple Finance Board asking anyone who had bought an iPhone 3G to provide three pieces of data: the serial number (with a few digits X'd out), the date of purchase, and the first 13 digits of the so-called IMEI number.

  The International Mobile Equipment MORE

  Philip Elmer-DeWitt - Oct 6, 2008 8:42 AM ET
  Posted in: 3G, Apple, IMEI, iPhone, iPhone 3G, Quarterly earnings, Quarterly report, Sales