iTV could become bigger than Apple circa 2010
Misek’s checks point to a full-blown iTV launch later this year, likely in the September to October time frame. The rumored device may be priced in the neighborhood of $1,500 and have a 42-inch to 55-inch screen. The iTV will likely carry lower gross margin compared to Apple’s corporate average, but that’s inevitable considering the economics of the TV business, which has always been plagued by long upgrade cycles, low margins, and increased inventory risk.
That’s pretty close to Morgan Stanley analyst Katy Huberty’s predictions; she thinks the iTV will fetch an average selling price of $1,300. Eventually, Huberty is modeling for the TV business to generate $68 billion in revenue annually and generate earnings per share of $18. For context, that would be more revenue and profit than the entire company did as recently as fiscal 2010.
Have no fear
Investors shouldn’t worry too much about lower gross margins on a TV because the device’s strategic importance lies more in its ability to bolster the broader ecosystem and widen the “halo” around all of Apple’s products.
The article Is an Apple TV Event Just Around the Corner? originally appeared on Fool.com and is written by Evan Niu, CFA.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, and Intel.
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