AAPL Climbs Back on the Horse
A week after Apple shares took a nose-dive on news that CEO Steve Jobs is taking a leave of absence to focus on his health, the company's stock is nearly back to the record-high levels it enjoyed just before the news hit. The expected arrival of the iPad 2 and iPhone 5 later this year, as well as Apple's continuing dominance of the app market, have apparently restored investor confidence in short order.
This might be shaping up to be a good week for Apple, with investor confidence roaring back. AAPL closed Tuesday at US$341.40, up 1.17 percent.
Recall that Apple stocks kept tumbling all week after CEO Steve Jobs announced Jan. 17 that he was taking medical leave. They plunged about $8 Jan. 18 and closed the week down $21.76.
By Monday, however, the market appeared to have priced in Jobs' absence and to have accepted analysts' expressions of confidence in Apple's management team, picking up $10.73.
Apple's shares still have to gain more ground to hit the record high of $348.48, where they stood on Jan. 14.
That Was the Week That Was
Publicity-wise for Apple, the most striking news of the week was that downloads from the company's iTunes App Store have exceeded the 10 billion mark. Then it was learned that the woman who won $10,000 for downloading the 10 billionth app Saturday morning apparently hung up on Apple's congratulatory call, thinking a telemarketer had dialed her number.
The news further cements Apple's current status as king of the mobile apps heap, although Android is catching up slowly but surely. In fact, according to the Appcelerator IDC Mobile Developer Report for January, developers are increasingly planning to create apps for the Android platform.
Google has nearly caught up to Apple in smartphone popularity and is closing the gap in tablets, Appcelerator reported.
Good News for Apple
Barclays Capital expects more new and innovative products from Apple in 2011 that should interest the investors, the company explained in a Tuesday note. It expects Cupertino will announce the iPad 2 within the next two weeks.
Barclays capital expects the iPad 2 to begin shipping early March or late April. It also expects Apple to launch new Mac products throughout the year, to unveil the iPhone 5 in the summer, and to hold its annual iPod event in early September.
Although there are risks surrounding a change of CEO, if that's warranted (despite his leave of absence, Jobs is still Apple's CEO; COO Tim Cook is handling the company's day-to-day operations), Barclays Capital believes Apple's cash flow still makes it investment-worthy.
Further, Cupertino is gaining ground in the PC market because of its new MacBook Air products. Total PC unit sales were down 7 percent year over year for the period Jan. 9 through 15, but Mac unit sales were up 20 percent year over year during that period, Barclays Capital pointed out.
Apple will probably be able to sell more than 30 million iPads in 2011, Brian Marshall, an analyst at Gleacher, told investors in a note.
Marshall raised his calendar year 2011 earnings estimates for Apple from $91.4 billion to $104.1 billion and expects earnings per share to hit $24.50, up from the $20 recorded in 2010.
Looking to the Future
It certainly looks as if there's good reason for optimism about Apple's future.
Deloitte has predicted that combined global sales of smartphones, tablets and non-PC netbooks will exceed 400 million in 2011, and that enterprises will buy more than 25 percent of all tablet computers.
That, according to Deloitte's calculations, means more than 10 million tablets will be snapped up by enterprises and that the corporate demand for tablets will only increase in later years.
Despite challenges from tablets running Android and other operating systems, the iPad still has the lion's share of the market, which means iPad sales will continue to remain strong, as Gleacher's Marshall predicted.
That situation's likely to continue a while -- major manufacturers are waiting for Android 3.0, aka "Honeycomb," Carl Howe, director of anywhere consumer research at the Yankee Group, told MacNewsWorld.
There are few brand names in the market offering Android tablets now, and this has delayed the creation of apps that will work on the larger screens Android tablets have, Howe suggested.
"Chicken, meet egg," Howe remarked, pointing out that solving this problem will take a while.
Tackling the Corporate Market
Acceptance of the iPad in the enterprise may be accelerated by Apple's recent hiring of security expert Dave Rice as director of global security. Rice, who served as a global network vulnerability analyst for the National Security Agency, is well known in security circles.
Apple needs to beef up its security, which may not quite be up to enterprise standards.
"The biggest concern among IT managers is that Apple doesn't have adequate support within the enterprise," Laura DiDio, principal at ITIC, told MacNewsWorld.
Fifty percent of almost 1,000 enterprise users ITIC surveyed worldwide had expressed concerns about iPhone and iPad security, DiDio said. However, only 25 percent of them took any action.
"Most people don't take proactive action; they wait for disaster to strike," DiDio remarked. "However, it's human nature to blame the vendor if a security problem crops up."
Apple "realizes that it has to take action now because if there's one security breach, that will mean millions of dollars of bad publicity for it at a time when it doesn't want bad publicity," DiDio said.