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Apple: iPad Lead Time Shows Strong Demand

May 01, 2012 10:21 AM ETApple Inc. (AAPL)
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Long Only, Tech, Value, Growth At A Reasonable Price

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Chuck Jones’ career has spanned twelve years as an equity analyst, sixteen years in various roles at IBM and most recently as a Wealth Strategist with Northern Trust. At Northern Trust he developed and implemented a go-to-market strategy to introduce Investment Management and Trust Services to Technology Executives and Private Equity Partners. Utilizing a wide range of contacts in the Technology, Life Sciences and VC worlds he was able to determine the financial goals and objectives of individuals and families. He then brought in key partners to develop unique strategies to fulfill them. At Atlantic Trust Private Wealth Management he was one of two analysts that determined the technology holdings with ... More hardware, software, services and Internet companies being his primary focus. Utilizing extensive financial modeling, meetings with company C-level management and industry contacts and his knowledge of IT and the financial markets he beat key industry benchmarks six consecutive years. He also was very visible with regular appearances on CNBC, Bloomberg television and radio and multiple publications. Before joining Atlantic Trust in 2001, Chuck was the lead analyst for the Internet Security Software segment for Smith Barney. He authored the most comprehensive industry report “Internet Security Software: The Ultimate Internet Infrastructure” and an innovative analysis of deferred revenue “Breaking the Code on Deferred Revenue”. His first entree to the financial community was at Salomon Brothers following the Enterprise Server Hardware companies such as IBM, Hewlett-Packard and Sun Microsystems. Prior to becoming an equity analyst Chuck spent sixteen years at IBM where he held a variety of sales and manufacturing positions. He qualified for ten consecutive 100% clubs with multiple sales awards including a President’s award. He worked on multi-year sales and implementation projects for solutions that encompassed thousands of end-user systems to mainframes, application and system software, services and financing. His initial jobs at IBM involved interfacing between manufacturing and sales to project demand for storage systems and determining production schedules. Chuck has a B.S. in Industrial Engineering from Stanford University and a Postgraduate Diploma in Economics from the University of Sussex, England, while on a Rotary International Fellowship Scholarship.

I have been tracking Apple's (AAPL) new iPad's availability in all of the countries that Apple has retail stores. What started at 2 to 3 weeks when the iPad first started shipping on Friday, March 16, improved to 1 to 2 weeks on Tuesday, March 21, in all countries.

It stayed at 1 to 2 weeks until Friday, April 20, when it improved to 5 to 7 business days in the US, Japan, Canada, Australia and France. It is still at 1 to 2 weeks in the UK, Germany, Switzerland, Italy, Spain and The Netherlands.

The iPad became available in Hong Kong on Friday, April 20, with 1-2 week availability along with South Korea and eleven other countries. On April 27 it became available in nine more countries including India. It is not available in Apple's China stores.

The improved shipment times and introduction of more countries is a good indication that there aren't any major manufacturing issues. However, after almost one and a half months of shipping Apple has not caught up with demand.

A way to get a read on how the new iPad is doing is to check the percent of traffic it generates versus the iPad1 and iPad2 as measured by Chitika. On April 28, 2012, about 11% of all US iPad traffic was on the new iPad.


Through March 2012 there have been 67.1 million iPads sold and my initial estimate is that Apple could sell 16 million iPads in the June quarter. This would be a 73% year over year increase and 36% higher than the March quarter. While these are lower than the growth rates after the iPad2 was launched a year ago this quarters growth is coming off of a higher base (11.8 million in the March 2012 quarter vs. 4.7 million in the March 2011 quarter). Depending on its introduction to China (Apple could be waiting for a resolution to the Proview suit over the iPad naming rights in China), increased corporate and educational demand my estimate is probably more biased to the upside vs. downside.

Disclosure: I am long AAPL.

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