By Jonathan Chen
They may not be Santa Claus, but these two tech titans might be the next best thing.
Yesterday we saw the release of the Apple (NASDAQ:AAPL) iPhone 4S,and last week Amazon (NASDAQ:AMZN) announced its new tablet, the Kindle Fire, along with three new versions of the already popular e-reader, the Kindle.
Demand for the Kindle Fire is already incredibly strong, with supposedly 50,000 Kindle Fires being pre-ordered every day since the press conference. Additionally, the demand for the next iPhone is extremely strong, with Apple having not released a new phone in eighteen months. What is incredibly interesting is not that these two companies are seeing strong demand for their products (everyone knows and loves both Amazon, and Apple), but rather the timing of the events.
Both events happened within a few days of each other, but if you look at the calendar, you will notice something coming up in a few months: the holiday shopping season. That's right, the all important time of the year for retailers. Apple and Amazon are the two largest retailers in this country, and both companies have made sure that their new products will be available well before the start of the shopping season. The Kindle Fire is available November 15, and with pre-orders supposedly hitting 50,000 per day, this could be a boon for the transportation companies, which depend on strong business during the shopping season.
Apple made sure to have the iPhone 4S available next week, giving it plenty of time to potentially break records for iPhone sales during its all important first quarter. Even though some were hoping for an iPhone 5, there is going to be record demand for the iPhone 4S, based off the many different changes from the 4 to the 4S.
In the note, Piper Jaffray wrote, "Yesterday AAPL officially announced its new iPhone 4S set to launch 10/14/11. We believe the later timing of the launch this year combined with pent up demand (prior and new phone carriers now offering iPhone), shifts a roughly estimated 2.0M-4.0M units to be shipped via air cargo providers during 4Q11. Combined with AMZN's previously announced launch of its Kindle Fire tablet, lean U.S. inventories across most verticals, and a lackluster ocean shipping season thus far that likely hasn't beefed up Freight levels ahead of the holidays, we believe 4Q11 is setting up for potentially better than expected air cargo demand versus current lower end expectations. We see FDX and UPS as the biggest beneficiaries in this environment ..."
As consumers worry about their wallets with tremendous economic uncertainty, they may not spend as much money as they have in recent holiday shopping seasons. With the release of these two "must-have" tech products, it would be a welcome sight to the transports and in turn, the U.S. economy. As long as consumers see products that catch their eyes, they may be willing to spend on ancillary products. First Steve Jobs, now Tim Cook, and Jeff Bezos, have all done wonderful jobs of that.
That is where the Apple ecosystem comes in, and where Amazon's "Trojan horse" tablet is key. Due to the massive love of Apple products, it has actually created its own "economy" and ecosystem, with companies that generate a fair portion of their revenues solely from Apple products. Companies like Zagg (NASDAQ:ZAGG), Omnivision Technologies (NASDAQ:OVTI), ARM Holdings (NASDAQ:ARMH) and others see benefits to new Apple releases.
Amazon's tablet is a whole other story. The purpose of the tablet is to get people to actually shop on Amazon, and the inclusion of its new browser, "Amazon Silk" on the tablet, is another way for Amazon to suggest products for you to buy. It really is a Trojan horse to get you to buy more stuff on Amazon.
These two companies might be able to save Christmas, almost by themselves. Just don't ask these two tech titans to keep your Aunt Edna from sending you fruit cakes.
Traders who believe that Amazon and Apple will be able to save Christmas might want to consider the following trades:
- Consider suppliers, such as NVidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM), Broadcom (BRCM) and Corning (NYSE:GLW), which make parts for both companies' products.
- Also consider Apple and Amazon as well, as revenues during the holiday shopping season should continue to move higher over time.
Traders who believe that Apple and Amazon will not be able to save the U.S. economy may consider alternate positions:
- These two companies are massive in their reach, but they alone cannot save things. They are not Superman. If you believe this, traders can initiate short positions in the S&P 500 ETF (NYSEARCA:SPY), which looks to be in bear market territory.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.