Mighty Apple (AAPL) generates billion dollar business in a few months…

By: ispeculatornew
Date posted: 05.04.2010 (3:32 am) | Write a Comment  (9 Comments)

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Looking at Apple, generating a new billion dollar business can almost look easy. We have barely started the month of May and Apple’s latest product, which was announced in late January, is already on pace to generate $1 billion in sales in this quarter. Simply amazing. Apple confirmed yesterday that it had just sold 1 million Ipad’s, far more than expected and now on pace to become a bigger business than the Ipod or the Iphone if that is even possible. The beauty of the product is that Apple has high margins on Ipad sales by all estimates, and has spent little money on marketing the product. It helps when media around the world is putting Steve Jobs and the Ipad on the cover of every newspaper and magazine. If we estimate an average of 600-650$ per sale for each Ipad (not including money made on related products, applications, books, etc), we can see that the Ipad already has 2/3 of the billion dollar in revenues in a matter of weeks.

Apple’s stock soars…

Of course, no one will be surprised to see the impressive growth of Apple’s stock in recent weeks. The Ipad has certainly been a major success and those critics who said that the Ipad was nothing more than a big Iphone are probably very sorry if they went short on Apple’s stock. Interesting stat about Apple. I read somewhere last week that someone that would have bought Apple stock for 400$ when the Ipod was first launched (instead of buying the iconic Ipod), would now have 15,000$ worth of Apple stock today. Is the same true of the Ipad?

Google’s stock is still depressed

Now compare all of this to Google. Google has been looking for a billion dollar business for almost a decade now. Search has been an incredible business but where will the growth come from now? We wrote a series of posts recently about Google’s next billion dollar business speculating that it might be as a financial data firm, providing financial research or even as a hedge fund. There are of course many different possibilities for the search giant but it’s safe to say that Google’s story has been much different in 2010 from Apple. No big success to date and a major problem with the Chinese government has certainly not helped the stock.

Having said that, I remain an optimist regarding Google and certainly a long time bull. But certainly at this point there’s no way to give Google the win over Apple.

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9 Comments

  1. Comment by Zavi — May 4, 2010 @ 6:59 am

    I think it’s an interesting battle. Both are willing to fight all the way. But I have to agree with you that Google has a loong way to reach the next billion dollar business! Hopefully, the end of this is a win for us, the consumer!!

  2. Comment by IS — May 4, 2010 @ 7:10 am

    @Zavi – What would be your best clue if you had to guess what Google’s next billion dollar business will be?

  3. Comment by Zavi — May 4, 2010 @ 9:26 am

    Difficult question. I like your idea on financial research, but that’s not going to be easy.

    To add, Steve Jobs said on Google: “We did not enter the search business. They entered the phone business. Make no mistake: they want to kill the iPhone. We won’t let them […] This don’t be evil mantra? It’s bullshit.”

    Also, it’s even more interesting competition because the 2 companies have totally different vision. On one side, Apple has total control over hardware and software Apple doesn’t let anyone build iMacs, iPad, iPods or iPhones…

    On the other side, Google Chrome/Android is built with open source code. And Android (slightly same iDesign) has a good platform to beat the iPhone.

    What’s the next product that will beat the iPad? What will make more money? Who knows what’s next? I love both companies. Only time will tell us 🙂

  4. Comment by IS — May 4, 2010 @ 8:17 pm

    Wow, had not seen that quote from Steve Jobs, very good one!

    And yes, I agree that Google is a lot more open source, they are still more or less trying to gain control over the internet. I’m not saying it’s bad. Not at all. But they are not quite the “Do no evil” company they used to live by.

    And you love both companies, but which one would you buy for the long term?

  5. Comment by CSL — May 4, 2010 @ 11:10 pm

    Hi IS,

    I’ve been reading your blogs for a long time and would like to ask your view on BIDU. Do you think is a good time to enter now?

  6. Comment by IS — May 5, 2010 @ 6:09 am

    @CSL – I consider Baidu (BIDU) to be one of the more difficult stocks to get into right now. The main reason is that you almost have to consider the possibility of a Google-China agreement. It is unlikely, especially after what has happened in a the past few months, but if it did happen, you could expect Baidu to drop quickly.

    So personally I’d stay away from now or enter with expected growth but that possibility of a loss. Maybe using a put to protect for that risk would be wise.

    That being said, I think the picture is a lot more clear regarding Baidu than it was even a few weeks ago so I have hope:)

  7. Comment by Zavi — May 5, 2010 @ 6:52 am

    I really like google and its vision. I think there is a great potential in that company.

  8. Comment by CSL — May 6, 2010 @ 10:39 am

    Thank you for your comment.

    The market is dropping dramatically now because of the european debt, do you think it will continue to sustain?

    What other stock do you think is the time to enter?

  9. Comment by IS — May 7, 2010 @ 3:27 pm

    @CSL – That is really diffficult to say. But I can tell you that I’m happy to be doing long/short trades here instead of simply being long. It’s a tough market.

    As for stocks I like, you should join our premium newsletter:) But Google is one I like, Ebay too (although not as much since last week as you perhaps saw in my post this week). I think Apple still looks attractive and there are a few others. How about you?

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