Saturday, May 29, 2010

Sipping The iPad Kool-Aid

Quoting adamthompson3232 of the Apple Finance Board, "I love my iPad. If you are going to drink the Kool-Aid you need to make your own."
The comment was in the context of a discussion he started about estimated iPad sales in Apple's 3rd fiscal quarter. According to his posts, he sees iPad unit sales pushing well above 3 million units in the quarter, supply constraints not withstanding. 
I've been forecasting iPad unit sales for the June quarter in the range of 3 million units. Before taking a few sips of the homemade Kool-Aid this gentleman is making, I'd like to see some empirical evidence to support sales estimates above 3 million units. I'm not suggesting demand for Apple's new tablet device puts such a sales performance outside the realm of reality. It's possible, based on the early success of the device and depending on the amount of manufacturing capacity Apple has brought online, sales could astound most Wall Street analysts and Apple enthusiasts.
At 3 million units sold the iPad would add roughly 20% to year-over-year revenue growth for Apple and position to company for possibly a record-breaking quarter for revenue and earnings. Mindful each iPad sold also creates post-purchase monetization opportunities for Apple, forecasting for iPad unit sales above 3 million units puts revenue and earnings growth into hyperdrive.
I'll be watching the iPad numbers carefully. At 3 million units sold in the June quarter the iPad will be a catalyst for AAPL to move above $300 per share by late July. Empirical data to be released from independent sources over the next few weeks should provide some indication whether or not adamthompson3232's homemade iPad Kool-Aid should be passed around for celebratory toasts when Apple releases its 3rd fiscal quarter results or should be locked away in the medicine cabinet as a RDF hallucinogen to be sipped only in small doses. Either way, the release of the Apple iPad makes forecasting Apple's revenue and earnings results a much more interesting affair. 

Robert Paul Leitao


  1. DT, do you have any sense of how iPad sales are breaking down by model? There seems to be a huge difference in revenue and profitability between the 16gb wifi model and the 64gig 3g.

  2. rF, no doubt the different iPad model options and their respective sales rates will impact total revenue from the product line. I'm working to determine an ASP for the quarter for the iPad.

    As importantly, the 3G model might have a more positive impact on post-purchase monetization activity for Apple.