apple’s juice - what's driving their strategic value by richard d. smith, ceo, smith-trg

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Apple’s Juice

SMITH-TRG

Why – Apple will hit $450 a share in 2011A SMITH-TRG Perspective & Prediction: February 1, 2011

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Our ViewApple’s Mac, iPhone, iPad, and Apps success

in the global consumer space will continue to

drive growth in the often overlooked/under

reported Corporate marketplace.

Vision. Insight. Innovation. Strategy. Solution. Value Creation. SMITH-TRG

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Plus . . . Apple is one of the few companies in the

world that will be able to offer consumers

a broad digital media ecosystem with iTunes, iBooks, and the App Store.


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And . . .Apple can leverage its Apps library into

the TV market then Apps will ultimately

proliferate the TV world


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Why $450begins in 2010

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2010, was a

GOOD

Y E A R


iPad introduced - created

new product Category.

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Google Helped

Sell iPhonesApple's average iPhone prices

have gone up since AndroidThere has been some price erosion among the

other top vendors (orange line in chart), it is

surprisingly small.

http://fortunebrainstormtech.files.wordpress.com/2010/12/screen-shot-2010-12-20-at-6-53-15-am.png

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Apple Centric age arrived a.k.a. the paradigm shift

in June 2010


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the Paradigm Shift – led/driven by Apple’s Steve

Jobs as change agent with iPhone (Smartphones)

and iPad (tablets) as catalysts for digital-media

& iPopped enterprise transformation.


TM

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Computer Market

Share to 10.4%in 3rd quarter up

from 9.3% year ago

Average Apple computer

price about $1,360Source: Gartner & NPD


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October

2010 $51 Billion in Cash

Apple Shares @ $325+/-


Apple Takes Market Cap Leadreaches $288.3 billion


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Jobs

Announces

iAd

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iAd

Producerfirst web development tool

for Apple’s mobile iAd unit


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Apple’s strategy to pump

ad money to app developers that are

increasingly eyeing Google's Android

platform.


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12 - 25 - 10Apple Qtr. Ended Results . . .

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Record QuarterRevenues $26.74 billion

Net Profit $6 billion

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International Sales62% of Qtrly. Revenues

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Mac Sales Qtr.Sold 4.13 million

Up 23% over Qtr. Year ago

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iPhones Qtr.Sold 16.24 million

Up 86% over Qtr. Year ago

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iPads Qtr.Sold 7.33 million

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SMITH-TRG

15 Million

iPads Sold in 2010


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Corporate Sales $7.5 billionMac sales 5.2% of the market

up from 3.3% in 2009$11.3 billion forecasted for 2011

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iPods Qtr.Sold 19.45 million

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iTV’s Qtr.Sold 725 thousand

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. Jobs' "hobby― Gains

Traction, Apple sells 1 million TV

set-top units 2010 400,000 TV episodes rented

or purchased daily

150,000 movies rented

or purchased daily (only 250,000 set top boxes sold as of Oct. 18.)


http://www.thedigitalbus.com/wp-content/uploads/2010/09/images1.jpg

317Retail Stores

World-wide,

233 in U.S.44 New in 2010

28 were International


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Per Store Revenue - $34.1 millionUp from $26.2 million 2009 average


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http://www.iphoneincanada.ca/wp-content/uploads/2010/12/photo-21.jpg

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Apple Stock ROI$100 invested in 2005

$529 market value in 2010

SMITH-TRG

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Why . . . $450

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What - others say . . .

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Ticonderoga SecuritiesApple share price target is $550 (making

Apple’s value @ $506.6 billion) the highest

among analysts surveyed by Bloomberg and

61% more than yesterday’s closing price. – January 18th, the day Apple reported quarterly financials.

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Piper Jaffray Co.’s Apple target price of $483 is 14 percent

less than Ticonderoga’s $550 the

highest projection.

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Trefis, a forecaster . . .The value of a company is the sum of

the values of it’s divisions, plus cash,

minus debt.

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TrefisTarget Price

$420

http://static.seekingalpha.com/uploads/2011/1/25/saupload_apple.png

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Trefis estimates . . . Apple’s iPhone business constitutes around

53% of the $420 Trefis price for Apple’s stock,

or 27% above current market.

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Others - Summary Ticonderoga Securities @ $550

Piper Jaffrey & Co. @ $483

Trefis Trends @ $420Note: None say their target will be achieved in 2011

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What – we say . . .

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$450 Enabled by

three strategic growth areas . . .

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#1 Internationalfocus on market ‘Foot-Print’ penetration/expansion

#2 Domestic U.S. consumer & corporate growth – across product lines

#3 iTV & iAdsemerging market development/expansion

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Why & How . . .

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Business Model Success Indicators

Total Sales

Up $45.9 B $65.2 billion in 2010

$19.3 billion in 2006(Fiscal 4th Qtr. ends Sept.)

Net Income

Up $12.32 B$14.3 billion in 2010

$1.98 billion in 2006


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Primary Growth Opportunity Indicators

iPhone Prod/Svc

Sales $25.2 billion in 2010

Up 93% over 2009Selling in 26 Countries

iPad Prod/Svc

Sales$4.96 billion 2010

Post launch

first nine months


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Apple’s iPhone Business Value today exceeds the combined market caps of

mobile competitors RIM, Nokia and Motorola

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International. . .

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2010 - 5 billion mobile phones in use

global population 6.8 billion

implying 70+% worldwide

mobile penetration.Penetration among unique individuals is

lower due to individuals with multiple

phones.

Source: Wireless Intelligence

http://static.seekingalpha.com/uploads/2011/1/25/saupload_mobile_market_shares.png

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2011, expect 1.6 billion mobile phones to be

sold world-wide - 4 phones sold for every PC

Apple benefits from existing international

presence and pent-up demand for high-value

brand image of Mac’s, iPhone & iPad

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Case for Apple –Apple introduced the iPhone 4 in China during

the fall of 2010, just three months after the

iPhone 4’s U.S. release in June 2010. By contrast, Chinese consumers waited nearly two years for iPhone 3G.

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Having ceded much of the high end of the

smartphone market to Apple Inc., slower-

footed rivals such as Research In Motion Ltd.,

Nokia Corp. and Motorola Inc. are jostling for

relevancy and what remains up for grabs:

cheaper cellphones providing Internet access.

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Plus, the 2010 holiday season price wars in

midrange smartphones forced wireless carriers

and global handset makers to focus more on

affordable lower margin smartphones — which

skimp on high-value features such as screen

resolution and camera quality.

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domestic U.S. . .

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Verizon iPhone

(CDMA) available February 2011 and

expected to drive strong U.S.

demand.

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Corporate Business$11.3 billion forecasted for 2011

$7.5 billion actual Sales in 2010

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FORTUNE 50 Co’s38% have mobile-optimized websites

& 58% offer a mobile application.

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Global 1000 Co’sMost likely to develop --

Apps for iPhone (58%)

Android (32%) and Blackberry (26%)

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iTV & iAds. . .

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Longer Term . . . Apple has larger ambitions in

the TV market, the new $99

version of Apple TV is just the

beginning of something much larger.

http://www.thedigitalbus.com/wp-content/uploads/2010/09/images1.jpg

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. Full-screen "Tron" iAdwill run in iPad apps

such as TV Guide Includes 10 minutes of video, images

from the movie, theater locator with

show times with preview of movie

soundtrack with option to purchase on

iTunes without leaving the ad.


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A preview of iAd’s coming in 2011.

The format, designed to maximize

the ad potential of Apple's tablet

computer, will be launched widely

in early 2011 when other ads start

flowing onto the platform.

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iProducer . . .lets agencies and developers build

iAds themselves meaning faster

development cycles, more ads and

dollars follow onto the platform faster

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digital agency types take in a sigh

of relief now that they can develop

mobile ads for iPhones -- soon

for iPads -- on their own without

Apple's help.


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Motive & OpportunityGlobal LCD TV market estimated at

nearly $100 billion in 2010 revenue,

U.S. TV advertising market estimated at

$70 billion

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Where we stand . . .

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Baseline January 7th

$341.78 a Share +5.66 (1.68%)Range $337.17 - $342.07

52 week $190.25 - $342.07

Market cap - $313.52B


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February 1stApple $345.02 a Share

Market Cap $317.8 billion


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SMITH-TRGbusiness value creators

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iPoppedThe global digital-media consulting and

venture development arm of SMITH-TRG

Digital-Media

TM

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More Value.

Same Source.Across media. Across technologies. Across continents.

Business performance improvement & value creation consulting.


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questions or comments. . [email protected]

apple’s juice - what's driving their strategic value by richard d. smith, ceo, smith-trg

Technology