Next Apple TV version in September: Report

1 Aug 2015 | Author: | No comments yet »

Apple Inc to unveil next Apple TV version in September: report.

Apple (AAPL) shares are down $1.10, or 0.9%, at $121.27, despite getting a new bit of positive coverage from the Street this morning, from Nomura Equity Research’s Jeffrey Kvaal, who took over coverage from Stuart Jeffrey, who had had a Neutral rating on the stock.Nomura’s Jeffrey Kvaal slapped a “buy” rating and $145 price target on the tech giant’s stock Thursday as he initiated coverage of the company, saying he sees good things ahead next year. “We expect Apple to extend its share gains in 2016,” wrote Mr.Apple will launch the next generation of its Apple TV set-top box in September, with a new remote and support for Siri voice control, a report said Thursday.The top story on Techmeme, picked up by at least three dozen tech news sites, is a report on BuzzFeed News that Apple is set to release a new Apple TV in two stages: BuzzFeed’s sourcing is a little fuzzy—”sources familiar with Apple’s plans”—and the same reporter, John Paczkowski, told us in March that the big reveal was going to be in June. “One of the theories bandied about when WWDC came and went without any Apple TV announcements,” he writes, “was that Apple didn’t want to announce the new Apple TV until the subscription TV service was ready, too.

The iPhone maker was expected to unveil a new version in June at its annual Worldwide Developers Conference, but it launched the Apple Music streaming service. Last year, that was Apple Watch; this year, it’s Apple TV.” “If you want to make a statement, you do both parts at once,” he says. “The reality is that things on the content side have been painfully difficult for Apple. Kvaal says he’s bullish on the stock are his expectation of substantial iPhone 6 sales, medium-term opportunities in China and long-term opportunities in emerging markets and via Apple Watch and Services. They just haven’t been able to pull it all together at once.” I’m trying to imagine what kind of advertising we’ll see from Apple this holiday season.

Instead, the company wants to release the new device with existing third-party services, such as Netflix, Hulu, HBO Now and Showtime as the existing Apple TV has been around for too long. Given that industry unit growth is driven by emerging markets, which thus far have primarily purchased Android phones, one would expect Samsung to be at least holding its own in the handset market. However, Samsung, though still the industry leader, has seen its share trending down over the past few years from the low-30% area to the low- 20% area. We believe most of the share loss was captured by LG, Lenovo and Huawei – together their share has increased from ~9% in 1Q12 to ~16% in 1Q15—and to a lesser extent by Apple. However Samsung’s preliminary 2Q15 announcement of 75mn Galaxy S6 units shipped were lower than the original expectations (estimated as of early 2Q15) of 84mn by our colleague Mr.

Chung notes that Samsung is increasingly facing intense competition from Chinese companies and it is yet to show meaningful signs of turnaround in the mid- to low-end smartphone market. Nevertheless, Apple has managed to hold share as the market moved away from its sweet spot in the high end of the smartphone market —an impressive feat indeed. The survey showed that 53% of the respondents that own an iPhone have switched from Android; and, perhaps more important, 32% of Android users who plan to buy a new phone within the next 12 months intend to switch to iPhone.

Based on our forecast of ~430mn smartphone unit sales in Other APAC in 2016, we estimate that if Apple’s share were to increase by 5% to ~20%, or its global average, Apple could sell ~20mn more iPhones per year. Given our estimate of 45% average gross margin on iPhone, this would translate to ~$5.7bn in gross profit and contribute approximately $0.50 to $0.60 in EPS. In China, the average price of a phone has risen 35%, writes Kvaal, because of the iPhone, and he doesn’t see that changing anytime soon: “The strong demand for Apple’s product line has come despite its high price point in the market; While the growth rates Apple has enjoyed in China will inevitably slow, we do not expect its price point to come under pressure. China is such a big market, he notes, even a small gain there adds dramatically to Apple’s volume: “China is a large enough market that even modest share gains drive material unit volumes to Apple. Should Apple’s share rise from 15% to 20%—half of its US market share—this would add more than 20 million iPhone units to Apple.” As for Apple Watch, Kvaal thinks it’s been disappointing in its first quarter out of the gate, relative to high expectations, but he still thinks it can be a high-volume product for Apple: We believe Apple’s initial iteration of its Watch sold in the range of 3mn units in its first quarter of availability.

Our checks suggest that the Watch has yet to attract much enthusiasm beyond Apple’s core fan base […] We believe in the Watch as a product category over the long term. Remember, he writes, the watch market is similar to volumes in the smartphone market: “The total global market for wristwatches is approximately 1.2bn units per year, worth approximately $45bn, according to the Federation of the Swiss Watch Industry.”

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