Apple’s progress towards a $1,000 share price may yet go pear-shaped
New iPhones and iPads have everyone excited about Apple’s prospects, but pushing into China and into the TV market won’t be problem-free
Could Apple become the world’s first $1 trillion company? At last week’s closing share price of $633, Apple is now worth a whopping $590bn, but two leading Wall Street tech analysts believe the recent stellar rise of the iGiant is just the beginning.
Brian White of Topeka Capital Markets was first off the mark, putting a 12-month target of $1,001 on Apple’s shares. To put that into context, the share price stood at around $370 when the company launched the iPhone 4S last October. Then came analyst Gene Munster of Piper Jaffray, who also forecast that the shares would break through $1,000, albeit a year later in 2014.
The iPhone 4S and the new iPad – 3m of which were sold in its first weekend, in mid-March – have been behind recent growth, along with the company’s long-awaited promise to pay a dividend.
The current wave of optimism has been inspired by the prospect of further innovation, and opportunities to attract Apple aficionados in newer markets, especially China.
New versions of the iPhone are expected this year and next, with new iPads to follow. Apple is also likely to make further moves into the television market, possibly allowing customers access to their music, films and apps through a TV set in their living room. White reckons this could become a $100bn market for the company.
As for China, he reckons 230 million people in the country could have access to 3G wireless networks by the end of the year, creating a huge potential market for the iPhone.
Apple is also cash rich, with around $100bn in deposits around the world, despite planning to pay $10bn a year in dividends. But a $1,000 share price is far from guaranteed. There are risks. If and when Apple does launch its TV product, it is likely to display all the company’s famous innovation and design ingenuity. But TV is a truly cut-throat market, and its product will have to be very special to make its mark.
And its push into China is not without problems already. The company is in dispute with bankrupt Chinese electronics business Proview, which claims to own the iPad trademark in 10 countries, including China. A court case continues, with Proview trying to get Apple banned from selling the iPad in China.
Then there are the much publicised concerns about conditions at the Chinese factories of one of its suppliers, Foxconn.
And it is always worth bearing in mind that the moment when companies seem almost untouchable is often the time they also start to believe their own publicity and make mistakes. That hasn’t happened to Apple yet, but the risk must surely be there.