Apple, Inc. U.S. Consumer iPad Survey Signals Strong Demand $AAPL

Investment Thesis
•The market underestimates the earnings power of Apple’s mobile internet devices.
We view the combination of new product launches, broader distribution and more attractive

pricing as demand drivers over the next two years. Additionally, we believe iPhone, Touch and iPad
margins will remain above the corporate average, driving EPS upside as mix improves.

Potential Catalysts
• iPhone exclusivity expiration announcements in the US, Germany, Spain and Japan
• iPad shipment ramp as 3G version is launched and distribution expands in U.S. and internationally
• Further reductions in iPhone total cost of ownership (hardware or service plan cost)
Potential new content revenue streams, including books, magazines, video

Investment Risks
• Pricing and gross margin pressure if carriers push back on high iPhone subsidies in the face of exclusivity
expirations, competition, and network congestion
• Increased competition in the Smartphone market from Android-based devices, RIMM, Palm, etc





U.S. Consumer iPad Survey apple