updated 11:00 am EST, Wed March 9, 2011
Sales forecasts too high, claims analyst
The iPad 2 -- which launches Friday -- presents an "increasing risk of a bubble burst" for competing tablet makers, claims JP Morgan analyst Mark Moskowitz. The companies' sales expectations may be too high, says Moskowitz, and could come back to bite them in the second half of 2011. "In our view, the technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan," the analyst writes.
Based on build plan estimates, it's argued that tablet makers will produce just under 65.1 million units this year. Shipment estimates are expected to range anywhere between 43.1 and 57.5 million however, resulting in excess supply which could vary from 13.2 percent to 51 percent. A baseline JP Morgan scenario calls for 47.9 million in shipments, generating 35.9 percent in excess.
Apple is predicted to maintain dominance, potentially growing sales by almost 100 percent year-over-year to 29 million. The biggest victim in a bubble burst could be component suppliers. "Based on our research inputs, tablet makers eager to emulate Apple’s meteoric start are trying to secure components with inflated build plans," Moskowitz notes, suggesting that glass display, processor and "to a lesser extent" NAND flash memory firms could be hurt.
The analyst contents that people holding out for an alternative to the iPad may be "underwhelmed" by rivals. Only the Motorola Xoom and the forthcoming HP TouchPad may have any similar level of attraction.
Moskowitz's price target for Apple stock remains static at $450.