According to a recent report from DigiTimes, many players have decided to postpone the launch of tablets due to various issues surrounding them. [1] Some of the reasons cited are shortages of key components in part due to the Japanese quake and unstable performance of Android Honeycomb operating system, which Google (NASDAQ:GOOG) specifically developed for tablets. As a result, Apple (NASDAQ:AAPL) continues to capture most the growth in the tablet market as no real competitor has challenged it. Motorola Mobility (NYSE:MMI), Apple expected to face stiff competition from players such as Research in Motion (NASDAQ:RIMM), Samsung, Dell (NASDAQ:DELL) and LG that all planned to launch tablets.
Our price estimate for Apple stock, at $420 is roughly 25% above market price.
We discussed in previous notes Apple’s own concerns regarding supply constraints, which we cited as the biggest risk to iPad’s business rather than slowing demand. See articles titled Apple’s Move to Absorb Higher Component Costs Will Help iPad 2 and Upside to Apple’s Stock from Higher iPad Sales. We believe that there could be some gross margin impact for Apple relating to these cost pressures; however, so far higher iPad sales have outweighed any negative pressure on the cost side. We note that Apple reports earnings later this week (see Apple Earnings Preview: What We’re Watching), we will stay tuned for additional color on these developments.
See our complete analysis of Apple stock here
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