Piper Jaffray analyst Munster answers 12 Apple questions; reiterates ‘Buy’ and $250 price target

“Piper Jaffray analyst Gene Munster on Tuesday issued one of his trademark reports to address a number ‘unanswered questions surrounding the Apple story,’ such as when the company plans to next update its iPhone and the prospects for an Apple netbook,” AppleInsider reports.

“The report follows a series of similar installments dating back to May of 2006. Munster addressed 16 Apple questions last November and followed up with answers to 15 more questions in May,” AppleInsider reports..

Questions on general business operations:
• What is the current state of Apple’s business?
• How might Apple’s view the challenging economy
• How should we think about Apple’s gross margin guidance for FY09?

Mac-related questions:
• How are the new aluminum (and older plastic) MacBooks selling?
• Will Apple release a netbook?

iPhone-related questions:
• What is Apple’s current gross margin on the iPhone?
• How far are we into the iPhone’s international rollout?
• Will Apple release the iPhone in China?
• When will Apple release a new iPhone?

iPod-related questions:
• How should investors think about iPod growth going forward?

Questions on Apple’s Retails Stores:
• How many retail stores will Apple open next year?
• How will Apple stores sell the iPhone 3G as a gift during the holidays?

AppleInsider reports, “Munster maintains a Buy rating on Apple shares with a $250 price target.”

Full article here.

[Thanks to MacDailyNews Reader “Judge Bork” for the heads up.]

MacDailyNews Note: Steve Jobs, Apple CEO, October 21, 2008:

This particular downturn is not creating a market of cheaper computers. That market has existed for some time and there are parts of that market that we choose not to play in.

I think when people want a product of the class that we make, over and over again people have done the price comparisons and we’re actually quite competitive. So we choose to be in certain segments of the market and we choose not to be in certain segments of the market. And the question is is the downturn going to drive some of our customers to those lower segments of the marketplace and get to buy lesser products? And I will be surprised if that happens in large numbers and I actually think that there are still a tremendous number of customers that we don’t have in the Windows world or in the other 99% of the phone market we don’t have who would like to and can afford to buy Apple products. So we’ll see what the ratio of those two things are but we’re not tremendously worried.

As we look at the NetBook category, that’s a nascent category. There’s as best as we can tell not a lot of them getting sold. You know, one of our entrants into that category, if you will, is the iPhone for browsing the Internet and doing e-mail and all the other things that a NetBook lets you do, and being connected via the cellular net wherever you are, an iPhone is a pretty good solution for that, and it fits in your pocket. But we’ll wait and see how that nascent category evolves and we’ve got some pretty interesting ideas if it does evolve.

23 Comments

  1. $250 is in the bag, he’s quite right, but just don’t sell:

    – for 18 months or

    – whenever this mess blows over

    – or when enough people wake to the fact that Apple is not worth half what it was because of this recession.

  2. NeverFade,

    Price targets are almost always for 12-month periods.

    Unless you see a different time-frame explicitly specified, assume 12-months.

    I know for a fact that Munster’s is a 12-month price target of $250 for AAPL.

  3. Doesn’t Apple already have a netbook? It’s called the MacBook Air.

    Sure it’s $1,000 overpriced but hey, you got to pay for style, baby. It can fit in a manilla envelope afterall.

  4. It is nice to see a talking head that understands Apple’s value and growth. In the USA, Apple is about $1 of every $3 spent on laptops. As the iPhone halo spreads world wide, is it not clear to even the slow thinkers that Apple’s international market share is going to jump!

    Tsunami in market share! The other PC makers give and take from each other. That is the scraps that Apple does not want yet! Vista still poisoned the Windows PC well.

  5. Someone has been drinking too much Apple branded koolaid

    I can see Apple going to $250 if:

    They win some HUGE government project to outfit all desks with Macs.

    If they offer a broad range of hardware choices.

    If they invade the corporate space.

    If they provide the public with a “must have” device or software on Mac’s only that saves a lot of money or makes it and can’t be easily duplicated by competition.

  6. @R2,

    The MacBook Air is NOT a netbook. It is an ultralight notebook or perhaps a subnotebook. Netbooks typically use screens 10 inches or smaller, and a lower powered cpu. An example of a netbook would be the Asus EeePC.

  7. MacGenius, you are, essentially, saying that AAPL will never EVER hit $250! Apple will never win a HUGE government contract, not while Jobs is at the helm. A thousand here, another thousand there, but not tens, never mind hundreds, of thousands anywhere. Nor will they offer the “broad range of hardware choices” you suggest. Broader, perhaps, but nowhere near the scale you would prefer. OK, they ARE invading the corporate space – a couple percent at a time – and they offer products that can’t be easily duplicated, but that’s nothing new.
    Apple is in three markets: PCs, MP3 Players and Smart Phones. Each market is growing. Their share of each market is either growing or dominant. They benefit from having one of the highest, if not the highest, profit margins in each market. They do not need to become the #1 PC maker by units sold in order for their stock price to rise. Nor do they need to expand their model selection or work THAT hard to bust into the Enterprise market. As long as things are going better for them than it is for the competition, they will continue to do quite well.

  8. @Marc G

    Says who? An Air Book is as portable as any netbook on the market. I was at a meeting the other day and someone had an Asus. I swear it was over an inch thick!.

    The Air’s footprint is the same as the pad of paper I bring with me everywhere. A smaller footprint doesn’t save anything in the portability department. On the other hand I could put that full-size keyboard and 13″ screen to use every time I open it up.

  9. DLMEYER… Apple is in 5 to 6 major markets. The three you mentioned but there are 2 even 3 more:

    1. Software – OSx is a seperate market as Window is to the PC. SW carries a higher margin and in Apples case differenciates it from other hardware and software suppliers. More importantly, its growing at significant amounts and with above growth sales of the imac software will become an increasing important source source to earnings.

    2. Content Resaler – I rank Itunes, App store and future content genres (Gaming, Educational/training content, New releases, subscription videos etc) as seperate markets. Although proprietary to Apples hardware, this market can become its largest and fastest growing within a year or two.

    3. Consulting Services – Apple has a small consulting services but if you include the genius bar and its repair strategy, the 100’s of millions of devices generate a substantial business that will only grow over time. Although not measureable today, as Apple rolls out its new content distribution products, licensing fees, advertisement and repair contracts with large corporations, universities, hospitals etc can grow to a small but significant portion of Apple sales.

    New markets

    1.) Mobile microcontrollers – I strongly believe that Apple is poised to enter the microcontroller business for mobile. Given its 100+ million ipods and iphones sold annually, development of its own microcontroller/processor will help to further differenciate Apple from other mobile providers. The purchase of PA Semi will help launch Apple into a $3Billion business within 2 years. I suspect GM will be in the range of 65+%. If Apple was smart, they would spin off PA SEMI into a seperate public company that is majority owned by Apple so that they could contract other business to help lower cost of operation. Much like the EMC and Vmware. Such a company could trade with a market cap that is 4x Sales or $12billion–vmware currently trades at 4.1x sales.

    2.) Content Producer – Apples current content strategy has only a 10% margin. Given Apples large itunes, app store and mobileme base, Apple has a captive customer base for producing its own content (movies, songs, videos etc). In this manner, Apple will act like the new Disney. We all know that Jobs knows how to produce animation better than any– remember Pixar. Apple’s own content will allow it to obtain higher GMs and control distribution rights.

    Can you see Apple having 2 to 3 blockbuster movies each year. Each generating 500 million in box office receipts and 1Billion in total revenue when including DVD sales, itunes sales, marketing rights from clothing and toys etc– including the annual residuals created from resale of cable/satallite/broadcast royalties. If Disney, Universal, dreamworks and fox can do it. Steve can as well.

    The future is bright for Apple.

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