This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Apple's 'iPad Christmas' Holds the Key (Update 2)

Updated from 10:47 a.m. EST to include more outlook on the iPad in the eighth paragraph.

NEW YORK (TheStreet) -- Apple (AAPL - Get Report)AAPL is set to report firscal first-quarter earnings after the bell Monday, and all eyes will be on the iPhone with particular attention paid to how many tens of millions of units Apple sold in the quarter. However, the tech heavyweight's other flagship product, the iPad, may hold the key to the quarter.

On Apple's fiscal fourth-quarter earnings call, CEO Timothy D. Cook said he expected it to be an "iPad Christmas," following the company's announcements of the iPad Air and the iPad mini with Retina Display in that quarter. "I think it's going to be an iPad Christmas and -- but we will see," Cook said during the conference call. "We will report the numbers back to you in January how we did, but we are pretty confident."

For Cook to make a public statement about the opportunity ahead of Apple regarding the iPad is pretty bold. It's an indication that not only does Apple feel it's made the best tablet on the market, despite the plethora of tablets running on Google's (GOOG) Android operating system in the market place, but an indication the company had its supply chain in order as well.

Goldman Sachs analyst Bill Shope significantly raised his iPad unit sales and iPad revenue last week, noting that the larger form factor iPad (iPad Air) helped. "The far more substantial increase in our December quarter revenue estimate is due to our view that demand was far less tilted towards the iPad mini relative to the larger form factor iPad than we saw in 2013 and relative to our initial expectations, which drove our ASPs higher," Shope said in a note last week, raising Apple's price target to $635 from $620.

Morgan Stanley analyst Katy Huberty also believes the iPad could help drive upside for the quarter. "iPad shipments as high as 26M could drive potential revenue upside vs.
our model and consensus of 23M," Huberty wrote in her note.

Though Wall Street does not break down estimates by product sales, there are several on Wall Street who are expecting north of 25 million units sold. Fortune's Philip Elmer-Dewitt was kind enough to compile consensus, with a bunch of analysts expecting more than 25 million units sold, with the high being 28 million units from two analysts.

Apple sold 14.1 million iPads last quarter, compared to 14.6 million in the fiscal third-quarter, and slightly more than 14 million iPads in the year ago quarter. With a massive redesign of the larger iPad, and the iPad mini getting Retina Display, it's likely to be a strong holiday season.

Though it's expected that Apple will have sold more than 20 million iPads during the quarter, its market share continues to drop due to Apple's high pricing. Credit Suisse analyst Kulbiner Garcha says he expects Apple's market share to fall to 22% in 2014, down from 41% in 2012. "While we see the tablet market growing to 447mn units by 2017 (nearly twice CY13 estimates) we see most of the incremental growth in the sub $200 ASP segment where Apple is not currently exposed," Garcha wrote in his note.

Cantor Fitzgerald analyst Brian White explains that the iPad Air really helped drive results this quarter, given the enormous amount of positive praise from tech reviewers, media, analysts and consumers alike. "For the iPad, we believe Apple could exceed our 24.5 million unit forecast for 1Q:FY14 driven by strong demand for the higher-margin, higher-ASP iPad Air," White wrote in his note. "We believe the first-generation iPad mini outsold the recently introduced Retina Display version in 1Q:FY14."

For the full quarter, analysts surveyed by Thomson Reuters expected Apple to earn $14.07 per share on $57.45 billion in revenue.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.42 1.26%
CHL $68.61 0.69%
GOOG $555.48 2.13%
FB $80.41 1.07%
TSLA $207.19 1.68%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs