Seeking Alpha
Profile| Send Message|
( followers)  

Investors are looking to an Apple (Nasdaq: AAPL) new product launch this week. Although it hasn't been officially stated - just hinted at by the drawings on the invitation - it is set to be the launch of the iPad 2. Attention will be focused not just on who actually makes the presentation (if not Steve Jobs, will the presenter provide an update of his condition?) - but on the product itself-- what changes were made in the new version, and which components are inside the tablet computer.

The casinos are already open regarding which component manufacturers will take part in the iPad 2 party. Even before the event, and before opening up the insides of the first device, I guarantee there are two companies with an Israel connection.

The first is SanDisk Corporation (Nasdaq:SNDK). That is because like its predecessor, the iPad 2 will be based NAND flash alone. This component is the most expensive one in the iPad - around 16% of the overall components cost in the 32 GB version, which in the second generation is set to be the minimum of storage space.

As far as who will be the supplier of the flash for the iPad 2, there are three options - and all three are good for SanDisk.

One option is that SanDisk sells directly to Apple, and another option is that Samsung (OTC:SSNLF) sells to Apple for the iPad 2, like it supplied the original iPad - and pays royalties to SanDisk.

The third option is that other flash suppliers, who don't pay royalties to SanDisk, sell to Apple. But even without royalties, the fact that Apple is buying new flash chips for the iPad 2 will contribute to maintaining the stability of flash prices, and indirectly to SanDisk's high margins.

The ultimate dream of SanDisk investors is that SanDisk's iNAND is chosen as the storage solution for the iPad 2. It is in fact quite possible, since Apple chooses the best in terms of performance to price ratio. There is no better certificate of excellence for SanDisk than the fact that its biggest competitor in flash - Samsung - specifically preferred the iNAND solution for its Galaxy family of tablet computers and smartphones over its own similar solutions.

The second company connected with production of the iPad 2 is Orbotech Ltd. (Nasdaq: ORBK), whose machines produce and inspect the electronic circuits in Asia, and inspect the LCD screens.

Microsoft provides Lync to two Israeli firms

Microsoft (NASDAQ:MSFT) renamed its communication solution Lync last quarter. Lync is only software-based, but on the hardware side it recommends to its customers technology from two Israeli firms whose shares I hold in my portfolio tracked by "Globes", and which appear to me to be very promising in 2011: Radvision Ltd. (Nasdaq: RVSN) in video and AudioCodes Ltd. (Nasdaq: AUDC) in VoIP.

Radvison separated more than a year ago from Cisco (NASDAQ:CSCO), and since then has succeeded to come out with its own end user devices and to deepen its ties with other giants - such as, for example, Microsoft, Samsung, IBM, and others that are not yet known.

For Radvision, 2011 will be a transition year, a year of big investment in marketing infrastructure, and so its profit line will be relatively low compared with the record years. But its revenue line will pass the $100 million mark for its first time ever.

Audiocodes succeeded in surviving the shake-ups which were experienced over the past several years by all the companies that dealt in the VoIP telecommunications sector since the days of the bubble. Not only did it survive, but it succeeded in growing in revenue and profit over many quarters, as a supplier of VoIP solutions to enterprises. This was due to, among other reasons, its collaborations with giants like Microsoft and others.

For example, VoIP pioneer VocalTec Communications Inc. (Nasdaq:CALL) in its reincarnation is a supplier of VoIP telephony services in the U.S., based on Audiocodes switches.

Published by Globes [online], Israel business news - www.globes-online.com - on March 1, 2011 Reprinted on Seeking Alpha with permission © Copyright of Globes Publisher Itonut (1983) Ltd. 2011

Source: iPad 2: How SanDisk and Orbotech Will Benefit