Apple's new iPad Shines - Analyst Blog


The tech-giant Apple Inc. ( AAPL ) proved its popularity yet again as the Consumer Reports' list adjudged the "new iPad" to be number one in the tablet market. Apple won over the allegations of the third generation 4G enabled device emitting excess heat to snatch the top rank.

Consumer Reports noted that the heat emission issue was rampant among other tablets such as Google Inc. 's ( GOOG ) Android based  Samsung's Galaxy Tab 10.1 and Asus Transformer Prime when put through similar working conditions as the iPad while "playing a demanding game with the screen fully bright".   

Alongside the "new iPad" in the popularity list, Toshiba's ultra-light, Excite 10LE tablet version and Sony Corp's ( SNE ) Tablet P were also included, both Android-based tablets.

Since its launch earlier last month, the "new iPad" has been performing exceedingly well with 3 million units being sold in the first four days of its release. The "new iPad" is touted as the next catalyst for Apple to drive home the advantage it already enjoys in the tablet market with two-thirds of market share.

The distinguishable factor that has come across for the product is its state-of-the-art Retina display, 4G connectivity, faster processing speeds and a long battery life. With enhanced visual capabilities and faster processing speeds, the "new iPad" is expected to lure avid gamers away from traditional console gaming platforms from the likes of Microsoft Corp. ( MSFT ) and Sony.

iPads constitute a significant portion of Apple's total revenue, with sales of approximately 32.4 million units in fiscal 2011, a massive 334.0% growth from the year ago. The momentum continued in the first quarter of 2012, selling more than 15.4 million units, almost double that of the 7.4 million units sold during the year-ago period. Recognized revenues from iPad and accessories during the quarter shot up 99.0% year over year to $9.2 million.

We expect the "new iPad" to boost revenues for the current quarter and retain Apple's dominance (62.0% market share in the FY11) in the tablet market. We believe that the latest variant will help Apple storm ahead of its nearest competitors in the tablet market, including the likes of Samsung Electronics and Inc. ( AMZN ), which are slowly but surely making headways in the tablet market.

We conclude that Apple remains the biggest growth story, based on its superior product pipeline, Apps, iCloud and iPhone 4S, the "new iPad" and Apple TV. Apple is also well positioned to gain from its loyal customer base and international expansion, in our view.

Despite the impending patent lawsuits in various countries, which might be an overhang on the stock in the near term, we are optimistic about the company's long-term growth prospects.

Thus, we have an Outperform rating on Apple over the long term. Currently, Apple has a Zacks #1 Rank, implying a short-term 'Strong Buy' rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , AMZN , GOOG , MSFT , SNE

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