Apple: The Living Room Invasion Is At Hand

| About: Apple Inc. (AAPL)
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When we speak about Apple (NASDAQ:AAPL), not only must we note the historic rise of the share price but the constant invasion of Apple technology into all areas of our everyday lives.

From computing, to music, to smartphones. iPods, iPads, iMacs, iPhones and iEverythings, Apple is more a part of any life on the planet short of food and energy it seems.

There is no sense in going over the "stats", but suffice it to say that Apple has been the most amazing corporate success story on Earth as has their stock.

The Living Room Invasion Is Near

I wrote this article last October when the Apple TV was barely a rumor on anyone's radar screen. As it turned out, the drumbeat began to get louder and louder (read this Washington Post article from October 25th 2011) as the advent of an iTV, or whatever it will be called, had turned into a reality from a rumor from wishful thinking.

Since that time, much has been written and speculated about an Apple TV, but it is my opinion that another technology "assault" on our everyday lives is now at its tipping point, and based on some rumblings around the tech world, something might become clear as soon as this Monday from the WWDC in San Francisco.

According to ZDNet, written 6/6/2012, the announcement of a REAL Apple TV could "ambush" us on the initial advance into Living Room "turf" by early next week.

"While most are expecting that Apple will talk about iOS 6 and OS X Mountain Lion at Apple's annual Worldwide Developers Conference set to kick off next week, one analyst says that we should brace ourselves for the unveiling of a television set."

This was not some pie in the sky Apple shareholder speculator tossing grenades onto our armchair. This came from the highly regarded analyst Peter Misek, from Jefferies & Company: "This latest prediction comes from Jefferies & Company analyst Peter Misek, who estimates that the television will retail for around $1,250 and be called the iPanel."

The iPanel. Nice name and I would not bet against that. It works, and says it all. Not an enhancement of the Apple TV gadget it has now, but a real TV that could potentially take over the centerpiece of all homes, the Living Room.

The article further notes;

Misek explores a way to sweeten the deal by getting cable providers to offer a $500 subsidy. He claims such a subsidy "would certainly improve the value proposition" for consumers.

Misek says that while attitudes to subsidies are negative, he believes that an Apple television "presents a new and unique opportunity for the telcos to gain market share in a mature television market."

Forget the smartphone subsidies, now we are talking about TV subsidies to reinvigorate the stale television sales sector that has not yet responded to 3D TV. Who knows, with Apple and all of its technology, an iPanel could singlehandedly revolutionize that entire industry.

The benefits, as well as the effects, are simply mind blowing I think. As this article about DirecTV, written 6/5/2012, might suggest:

"Michael White is no run of the mill commentator speculating on Apple TV. White is the chairman of DirecTV (NYSE:DTV). I paid special attention when he spoke about Apple TV to Gigaom last Friday. He is a TV industry insider and should know more than the legions of commentators whose favorite pastime has become speculating on Apple TV. White's comments seem to be directed at a new set-top box from Apple as opposed to a TV panel.

There is no denying that over years DirecTV interface has evolved and has a large number of satisfied users. However, White's claim that Apple will not make his technology obsolete does not inspire much confidence. ""Typically with technology, it smashes the cost structure in some new way (but) with content costs, rights fees and the cost of spectrum it's hard to see (NYSE:IT) obsoleting our technology," he told Gigaom."

What else could one expect from the Chairman of a company who would face a full frontal assault on it's very existence right? Or is he just sticking his head in the sand?

The article further notes: "If past is a prologue, Apple TV may obsolete DirecTV interface."

Speculation being what it is, we can only blue sky the possibilities I suppose, but it certainly is fun to contemplate, and now to expect!

My Opinion

Apple's share price has been bouncing around within about a $20.00 trading range for weeks now. Soon, the quarter will be over and earnings speculation will begin in earnest once again.

Apple announced rather low earnings expectations of $8-$9/share and the average end of analyst estimates is about $10.25/share. I state "low" from Apple themselves, because sales in China of the iPad has just begun to reflect the potential, and Apple has a history of under promising and over delivering. The analysts estimates appear to be more relflective of their past estimates as you can see from this overview from Yahoo! Finance:

Earnings Est Current Qtr.
Jun 12
Next Qtr.
Sep 12
Current Year
Sep 12
Next Year
Sep 13
Avg. Estimate 10.31 10.38 46.93 54.06
No. of Analysts 40.00 41.00 49.00 50.00
Low Estimate 8.90 8.59 41.59 48.66
High Estimate 12.51 12.53 51.60 64.06
Year Ago EPS 7.79 7.05 27.68 46.93

What better time would there be for Apple to simply announce the reality of an "iPanel" while at the same time, blowing earnings estimates into smithereens once again.

Do I hear $700/share over the summer? Goldman Sachs (NYSE:GS) has a price target of about $850/share over 12 months.

Disclosure: I am long AAPL.

Additional disclosure: I own AAPL LEAP call options.