Brian White, senior analyst at Topeka Capital, was referred somewhere recently as “he of the $1,001.”
$1,001 is the price target White has confidently proposed for Apple Inc. (NASDAQ:AAPL) by, hold your breath, the year-end.
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
His raison d’être for the prediction: the likely launch of the new iPad Mini by September, coinciding with the release of the highly anticipated iPhone 5. This, along with the likely launch of Apple TV and the likely inclusion of China Mobile in iPhones, could in his words, make for the “biggest consumer electronics launch in history.”
But first, iPads. Last year, the iPad held a 62% share of the global tablet market, according to market research firm IHS iSuppli. The firm now projects overall tablet sales this year to surge 85% to 126.6 million units. That’s a huge market opportunity, but Apple Inc. (NASDAQ:AAPL) has a lot of competition snapping at its heels. These include bête noire Samsung Electronics Co. with its Galaxy Tab along with Amazon.com Inc. boasting of Kindle Fire, while Microsoft Corp. and Google Inc. have recently unveiled tablet devices. One of the main features the competition touts is the price advantage, and it is perhaps this weakness that Apple seeks to close with a smaller sized, but also a cheaper iPad Mini. By reducing the size and cost Apple may simply stamp out the competition given its generally better build quality, brand preference and the app environment.
That’s reason enough for the $1,001 target, perhaps, given the likely expansion of market share and the new markets Apple could find across the globe at a lower price point. Another thing – according to Topeka, the $1,001 price would discount earnings 18 times while the current multiple is only about 9 times earnings, which makes the case for a sizable up move from these levels.
If so much rests on the iPad Mini, what’s the real likelihood of a September launch?
According to an article in the Wall Street Journal, certain officials at Apple’s component suppliers, who preferred to remain anonymous, claimed that instructions have been received from Apple to get ready for mass production of the mini tablet. Another source claimed that LG Display of South Korea, and AU Optronics of Taiwan are working on the screens for the new tablet.
Given this information, the iPad Mini appears to a serious possibility, and therefore, so does $1,001.