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Morgan Stanley is totes in love with Apple Pay
With Apple Pay slated to launch this month, all eyes are on Apple to see if it can shake the curse of NFC payment systems and break through to mass adoption. We won't know if it succeeds for a while, but Morgan Stanley's Craig Hettenbach certainly seems upbeat about the possibility. In a release to investors -- which AppleInsider pored over -- Hettenbach makes some big predictions for Apple's future in the payment space. "By reducing fraud, improving data security, and increasing credit/debit volumes for issuers and networks, while protecting the value of the existing payments value chain, we believe Apple Pay has a high chance of success," Hettenbach boasts, adding that Apple appears to have solved all the major problems that have plagued past NFC payment efforts from the likes of Google and PayPal. Hettenbach also notes that wide adoption of Apple Pay will likely help boost the appeal and adoption of its competitors' payment platforms as well, which makes a lot of sense. Right now, NFC on the iPhone 6 and 6+ will remain locked down and out of reach for third-party developers who might want to use it, like Google, but if those bars are removed in the future, it could potentially cause even greater competition between the two tech giants.
Facebook files $5 billion IPO, values the company at nearly $100 billion
The rumor, speculation and awkward Winklevii jokes can end (at least for now) as Facebook has officially filed for its public offering. Underwritten by Morgan Stanley and Goldman Sachs amongst others, the internet's most popular site seeks to trade under the stock symbol "FB" when it goes public later this year. The company is seeking to raise $5 billion, according to this early filing, amounting to a lofty (and still tentative) valuation north of $50 billion. If that turns out to be accurate, though, Zuck will be one (especially) rich man: with a nearly thirty percent share in the company, his net worth would balloon to almost $30 billion. The process of going public also provides a rare glimpse into internal stats previously kept private, with documents revealing the service has 845 million active users each month -- nearly half of which log in and actuate 2.7 billion likes and comments each day. The filing also sheds light on the company's balance sheet, with revenues of $777 million, $1.97 billion and $3.71 billion in 2009, 2010 and 2011, respectively. All told, it logged profits of $229 million and $606 million in those years -- earnings that were bested by the $1 billion it netted in 2011. The majority of its revenue comes from advertising, yet a sizable chunk (12 percent) of last year's figure comes courtesy of Zynga. All in all, that's enabled the company to stash away nearly $4 billion in cash -- a sizable nest egg for a company only eight years old. As for Zuck, his 2011 salary of $500,000 will be cut to $1 as of January 2013, but he'll be more than comfortable, thanks to that 28.4 percent stake in the company.
FCC enlists more cable providers to offer discounted broadband to low-income families
Back in September, Comcast teamed up with the FCC to offer discounted broadband access to low-income families, in the hopes of bridging the connectivity gulf separating the haves from the have-nots. Today, that campaign is gaining new momentum, now that Time Warner Cable, Cox and most other major US cable providers have thrown their hats into the ring. According to the New York Times, many of the industry's heaviest hitters have agreed to offer high-speed access for just $9.99 per month, fueling the FCC's efforts to reach the estimated 100 million Americans without an at-home internet connection. The low-cost service will be made available for a 2-year period to disconnected families who have at least one child enrolled in the national school lunch program, and who have not recently subscribed to a broadband provider. On top of that, Ohio-based IT firm Redemtech will provide discounted computers to these families at a price of $150, with Morgan Stanley offering microcredit to those who need a little extra time to make the payment. FCC Chairman Julius Genachowski says the initiative, slated to be announced later today, should make a "real dent in the broadband adoption gap," by making the internet more accessible and, in theory, more valuable. The Commission hopes to expand the program to the entire country by September 2012, now that it's enlisted most cable heavyweights. Notably missing from the initiative are Verizon and AT&T (which has its own FCC-related matters to worry about), though the reasons for their absence remain unclear.
Nexon's Japanese IPO aims at raising $1.3 billion
When Nexon is finally added to the Tokyo Stock Exchange in December, the company has to be planning a massive "We're in the money!" song-and-dance to celebrate. TechCrunch reports that this will be the biggest IPO in Japan in 2011, with a corporate goal of raising $1.3 billion (100 billion yen) from the listing. The Korean company recently moved its headquarters from Seoul to Tokyo, and is well-known for its popular MMOs such as MapleStory, Mabinogi, and Vindictus. Nexon has over 3,000 people in its employ across the world, and previously said that it is open to purchasing more companies in Japan after the IPO. The company commented on its post-IPO strategy in a brief statement: "As we pursue our strategic objectives, we regularly review our options for accelerating our growth. We have made no decisions or announcements about any specific financing or other plans and cannot comment on rumors." The IPO will be handled by Nomura Securities, Morgan Stanley, and Goldman Sachs. Nexon is hoping that the move will raise its market cap to $9 billion, which will make it the biggest online gaming company listed on the Tokyo Stock Exchange. The company is currently worth $7.7 billion.
iPhone 5 production to begin in August
Morgan Stanley analyst Katy Huberty claims Apple will begin production of the iPhone 5 in the second half of August and ramp up progressively through the rest of the year. Using information obtained from Taiwanese sources, Huberty also writes in a recent research note that the iPhone 5 will go on sale in September, a date that coincides with earlier leaks. The iPhone 5 will be a big seller for Apple and the Morgan Stanley analyst keeps her yearly sales estimate of 72 million units. Third quarter sales may drop due to the September arrival of the iPhone 5, but an increase in sales during the fourth quarter will make up for any third quarter lag. Huberty also believes that Apple is working on a lower-priced iPhone and an Apple-branded TV. Both of these rumors have floated around for a while and have yet to come to fruition.
Hulu reportedly retains investment bankers and renews Fox deal, will go on sale soon
Following yesterday's rumor that Hulu had received an a buyout offer from Yahoo, the usual "people familiar with the matter" have informed the LA Times and a reporter for CNBC that the sale process could begin within two weeks. As its owners seek to separate themselves from what is looking more and more like a competitor than a savior, reportedly Guggenheim Partners and Morgan Stanley have been retained and potential bidders have been contacted. One way to make sure anyone is actually interested in buying the site is to strengthen its content licensing deals, and oh-so-coincidentally Variety is reporting Hulu has already reached a new deal to keep the TV shows from Fox flowing. Yesterday we asked for your ideas on who an eventual buyer might be and so far the list includes Google, Amazon, Facebook, Netflix and Pets.com, which should just about cover it.
Motorola's Sanjay Jha hints at a 7-inch tablet before the end of the year, foresees tablet prices dropping
Motorola's CEO Sanjay Jha had hinted once before that there would be a family of Motorola tablets, but speaking at Morgan Stanley's Technology, Media & Telecom Conference today, he promised that those other Moto tablets would hit before the end of the year. Naturally, Jha wasn't talking specifics, but we're betting that next tablet is a 7-incher -- he mentioned that 7-inch form factor a number of times and said that size was more "fun" and "portable." Similar to what he said on the Moto earnings call, he implied that the 10-inch size was more for professionals. Jha also spent a bit of time talking about pricing, and stated that he expects the price on the Xoom and other tablets to come down in price in the second half of the year, especially as component prices decrease. So, how's the Xoom doing at that $599 starting price? Well, it's only been a couple of days, but he assured the interviewer that "sales have started relatively well."
Analyst: Apple's sales in China could triple in two years
Here's more good news for Apple from the Chinese front: Katy Huberty and Mathew Schneider from Morgan Stanley have released a report saying that Apple could make as much as $9 billion from China in the fiscal year of 2012, as opposed to $2.9 billion in the last fiscal year. That kind of growth would be better than the rest of the world, which means that if there are any problems with Apple's revenue in the US and Europe over the next few years, China will likely make up for them. The report says all of that growth will come from two major factors. First, Apple is expected to expand its sales network in China. Apple has already founded four major retail stores and begun device sales through China Unicom and its online store, but there will have to be more ways for Chinese customers to find and buy Apple products in the future. Secondly, as we've heard before, China is about to go through a major surge in the middle class, bringing more people than ever into the range of buying and using Apple's products. If Apple can take advantage of that upcoming rise in income over much of the country, it'll be well on the way to the $9 billion number. This isn't a huge surprise -- we've known for a while that China will be a big source of growth for a lot of consumer electronics companies in the next few years. But it's interesting to see some numbers out there about just how big Apple's business in China might get.
Analyst: Apple producing more iPads
Analyst Katy Huberty from Morgan Stanley tells All Things D that she believes Apple is ramping up production on the iPad, aiming to build as many as three million a month by the end of this year. That would mean that the company could make 36 million iPads next year, which brings the total close to (but not quite) the whopping 40 million units predicted by her supply chain analysis. Sales estimates for next year started out around 10 million iPads, but have since risen to as high as 42 million units, which would be quite a year for a product that didn't exist before this past April. Currently, says Huberty, Apple is producing about two million iPads a month, and that's brought shipping times on the website down, and helped availability across the board. But the manufacturing process needs to be refined even further, and of course if, as expected earlier next year, the device sees a revision, that may delay things even further. There seems to be one thing most analysts agree on, however: Apple is going to sell a whole lot of iPads in 2011.
Many Verizon customers suffering from "extreme" interest in iPhone, BMX biking
A report over on Digital Daily this morning reveals something that may not come as much of a surprise -- people on other carriers (in this instance, Verizon) want the iPhone. Recent research out of Morgan Stanley shows there is "significant" demand for Apple's cellular delight -- with about 16.8 percent of Verizon's subscribers having "extreme interest" in the product compared to 7.5 percent in the overall population. What does this mean? It means that, if given the chance (i.e. if the iPhone came to Verizon), about 17 percent of current users would switch. That's a pretty high number, to be sure, and Morgan Stanley analyst Katy Huberty estimates that such a deal could move around 7 or 8 million iPhones annually. Of course, all of this comes from an analyst, and it's based on an unscientific survey, so take it with a grain of salt. Still, what's the deal, Steve? We know you love money -- make it happen!
iPad suppliers forecast shipments of 8 - 10 million for calendar year 2010
Analyst Katy Huberty at Morgan Stanley has published a research note forecasting shipments of 8 - 10 million iPads during calendar year 2010. That's significantly more than previous estimates, which showed shipments of about 5 million devices. The note, as reported in a WSJ All Things Digital post, still maintains a sales estimate of greater than 6 million iPads for the year, since shipments are not necessarily equal to sales (some production remains in distribution channels at year-end). Huberty notes that investors who are bearish on the iPad say that it lacks a "killer app." She counters with speculation that the near-term target is for the sub-$800 notebook computer market, which currently appears to be in the range of 30 million units in the United States and 120 million units globally. In the long run, media (video, magazines, books) and apps that have been optimized for the iPad will significantly increase the market size. For the short term (through May, 2010), suppliers are expecting to ship 2.5 million iPads. This is up sharply from Huberty's initial estimate of 750,000 units through the end of June. Earlier this month, analysts were reporting that delays in early iPad production would limit the quantities available at launch. Huberty has not been particularly bullish on Apple in the past several years, but has recently been citing Apple's leadership in the mobile device space and talking about "bull case scenarios" for Apple's future.
Analyst: There's a market of four to five million iPhones a year in China
I thought Apple sounded a tad bit defensive about China on the conference call Monday, but Morgan Stanley analyst Katy Huberty says there's nothing to worry about: she expects Apple to sell up to four or five million iPhones in China per year. Apple told us on Monday that they've activated about 200,000 iPhones in China so far, but Huberty claims that there's a market for maybe 50 million iPhones over there, and echoes Tim Cook's assertion that price is the main issue. "Hardware pricing, service plan pricing and the large up-front payment," she says in her report, "were cited by 85%, 66% and 56% of respondents respectively, as reasons they were not likely to purchase an iPhone." Keep in mind that the four to five million figure is a top end -- in the first year, Apple has said that they're aiming for more like one or two million. But there is definitely a solid market to be found in China, and significant sales there could help buoy Apple earnings reports over here for sure.
Analyst Roundup: Morgan Stanley pooh-poohs, iPhone sales looking bright
Morgan Stanley analysts yesterday cut AAPL's price target to $95, mostly citing the weak economy. They said that despite price cuts, extreme interest in the iPhone, Mac users' high satisfaction, and marketshare momentum for Mac sales, the quarter will be slow for Apple. Blog Notable Calls said it wouldn't have been surprised if AAPL slipped by five points yesterday, but instead the stock gained 34 cents a share before the closing bell. On a brighter note, Kaufman Bros. analyst Shaw Wu sees promise in iPhone gift cards, according to Fortune's Apple 2.0 blog. As with any gift card, Apple collects revenue from the customer up front. However, Apple can't report the revenue until the phone is activated, which will likely be during the first quarter of next year. Wu anticipates Apple will sell 6 million iPhone handsets during the company's fiscal Q1 2009, which includes October, November and December 2008. Morgan Stanley analyst Kathryn Huberty thinks Apple will sell only 4 million that same quarter. In the same Apple 2.0 story, Philip Elmer-DeWitt notes that Piper Jaffray's Gene Munster looked at how many units Walmart might sell, after pricing details leaked on Monday. He conjectures that each Walmart store could sell 1,284 iPhones in 2009, accounting for nearly 10 percent of Apple's worldwide iPhone sales. AAPL was up by $2.50 or so in midday trading.
AAPL down sharply after two ratings cuts
Bad day for Big Rainbow: RBC Capital's Mike Abramsky and Morgan Stanley's Kathryn Huberty cut their ratings and price targets on Apple stock, both citing weakness in consumer spending on PCs. AAPL was down 17.38 at 110.86 (-13.58%) as of this writing: a 20-minute-delayed chart is above. Abramsky's price target on AAPL shares is now $140 (down from $200), while Huberty's is lower at $115 (down from $178). Huberty also notes Apple will struggle because the company "does not play" in the sub-$1,000 laptop market. In a slim bit of good news, Abramsky raised his estimate of the number of iPhone units sold during the fourth quarter to six million, up from five. AAPL's price during the trading day has been its lowest in over a year.
Analyst roundup: 5m iPhones for Q4, gloomy Christmas ahead
Widely-read Piper Jaffray analyst Gene Munster is revising his prior estimate for the quarter ending a week from Tuesday, and his outlook is even rosier than before. Instead of 4.1 million iPhone 3Gs, Munster expects Apple will sell 5 million of the handsets. Likewise, he's revising his estimates for Mac sales up by 300,000 units, and iPod sales up by 200,000 units. If he's right, it will mean Apple will have sold 7.4 million iPhones so far this year. That puts Apple well on track to meet its own prediction of selling 10 million handsets for calendar year 2008. On the other hand, we have Morgan Stanley, who cut price targets for nine hardware companies, including Apple. Morgan cited a "fragile consumer," slower overall spending, and a stronger dollar (the last of which impacts sales abroad for U.S. companies). This comes after a weak August for Mac sales, which -- in context -- only means that Apple's numbers didn't grow quite as fast as they did in prior months. They still sold 23 percent more Mac units than August 2007, but that was sharply lower than July 2008's 43 percent increase over July 2007. [Via Fortune, Silicon Alley Insider, and 24/7 Wall St.] Thanks, Robert!
