One of Apple Inc.’s (NASDAQ:AAPL) biggest investors Carl Icahn has written to Apple CEO Tim Cook asking him to consider his advice and speed up its buybacks of its own shares. Icahn believes that the company’s current stock price is undervalued and it should be around $203. In his letter Icahn gave an in-depth analysis of his forecasts for Apple’s major products.
Let’s have a look at how valuable Icahn considers Apple’s products to the company’s growth.
Iphone
Expecting a revenue growth of around 30% because of a volume growth of around 22%, which includes upgrades as well as category growth, and a pricing growth of around 7% make iPhone’s future bright. Apple has never been one to take pricing pressure and will continue to do so as the Apple platform is extremely comprehensive as compared to the Android ecosystem. With carriers offering affordable contracts in China as well, iPhone will be a significant factor in Apple’s growth next year.
iPad and Mac
The 12.9 inch iPad will be the catalyst in boosting Apples growth in this category as the current year was a disappointing one. IMB will be partnering with Apple very soon and this will revolutionize how businesses work together. The said partnership would drive iPad growth at around 13% with a volume growth of 8%, which is due to innovation and a better offering. Pricing growth of around 4% should be expected as the iPad will be more expensive.
iTunes and iPod
The iPod is quite insignificant to company revenues currently; the acquisition of beats was an excellent move to offset this impact. The iTunes currently contributes 10% to the total sales number of the company. Icahn believes that iTunes is important to give company’s sales a boost. As far as iPod and Accessories are concerned, this area contributes only 1% to the company’s net sales; however Beats acquisition is likely to change this decline pattern for the better.
Apple watch
Icahn is doubling the industry speculation of the iwatch from 10 Million to 20 Million, which has an average selling price of around $450, meaning the iWatch would not only sell its entry level priced watches, but quite a few high end watches as well. It is being looked at as the expected driver of growth because it has taken the newest Apple product spotlight from the iPad – many have high hopes from the iWatch. Speculation states the prices could be as steep as $20000!
Apple TV
With an average selling price of around $1500, Apple could take the TV out of the 70’s! However, if the rumors DO turn out to be true, the Apple TV would only impact EPS growth figures of 2016 and 2017, taking them to 19% and 23% respectively.
Homekit and healthkit
Even though these are much talked about these days, Icahn however didn’t include these in his three year Apple forecast.
Apple pay
If 30% market share is achieved, Apple Inc. (NASDAQ:AAPL) could gain revenues of around $2.5 Billion in 2017.