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Apple Inc. (AAPL)’s ‘iTV’ Could Add $4.50 to EPS: Analyst

Rumors of an Apple Inc. (NASDAQ:AAPL) television have been swirling lately, as Cupertino’s CEO Tim Cook mentioned that the living room was an “area of intense interest” last week, and some tech analysts (like Gene Munster) are predicting that the company will release a smart TV by next fall.

Should this Concern Apple Inc. (AAPL) and Google Inc (GOOG)?

In a report from Morgan Stanley (reported by AppleInsider), an AlphaWise U.S. consumer survey is used to predict just how much profitability a TV would add to Apple’s bottom line. In the original survey of close to 1,600 household heads, it was found that “47 percent said they are ‘interested’ in an Apple television […] 23 percent of consumers said they were interested in purchasing an iPhone in a February 2007 survey, while 21 percent of respondents said they wanted to buy an iPad in April of 2010.”

Another 11 percent of survey participants indicated they were “extremely interested” in the so-called Apple Inc. (NASDAQ:AAPL) ‘iTV,’ which led Morgan Stanley to translate these figures into sales of 43 million units, which includes the “interested” segment.

Furthermore, close to half – about 46% – said they were willing to pay $1,000 or more for the device, while 10% would pay over $2,000. According to AppleInsider, “[o]n average, respondents said they would pay $1,060 for an ‘iTV,’ which is a 20 percent premium over the $884 paid for the current average television set.”

From a monetary standpoint, Morgan Stanley estimates that these two insights indicate that Apple Inc. (NASDAQ:AAPL) could make sales of $13 billion in the U.S. alone if it chose to release the device in the back half of 2013. This would add an estimated $4.50 to earnings per share over the short term. Over the longer term, the report estimates that a global rollout of an Apple TV could “multiply those estimates by four,” according to StreetInsider.

While it remains to be seen if – or when – Apple will officially announce a television, investors should be bullish about the stock’s prospects on this news. With early demand for the device estimated to be more than twice that of the first iPhone and iPad, a noteworthy upswing in EPS isn’t out of the question.

For the 2013 fiscal year, Wall Street is expecting that Apple Inc. (NASDAQ:AAPL) will generate earnings of $49.35 a share, while these estimates rise to $58.03 for FY2014. With a potential fall release on tap, the majority of the first-year windfalls would likely not be felt until 2014, but the aforementioned ‘iTV’ EPS forecast would add 7-8% to the company’s estimated bottom line that year.

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