Will Apple Suffer an iPad Letdown?

There's plenty of hype leading up to tomorrow's new iPad unveiling. Apple (Nasdaq: AAPL  ) is expected to introduce the third generation of its revolutionary tablet, and the speculative buzz points to a slick handheld device that offers better graphics and processing power. It may even outdo the iPhone 4S by going 4G.

Gadget buffs and early adopters are going to decide whether they want to buy it or not, but investors may very well be going through the same process as it pertains to Apple's stock itself.

The Wall Street Journal offers up an interesting perspective in its "Ahead of the Tape" column. Spencer Jakab points out that -- outside of the original iPhone -- the average one-week performance for Apple's stock after an iPhone or iPad hits the market is a decline of 3.5%.

Ouch!

Keep in mind that this is when the iOS gadget actually hits retailers. Apple's stock has actually historically risen between the time a new iPhone or iPad is introduced -- as it will tomorrow -- and the time it takes to be widely available. The week leading up to the sale date has actually averaged a 2.9% gain.

The column suggests that speculators hopping on now will be well served to cash out ahead of the actual release. It may seem like sound historical advice, but it's never as easy as that.

Some of the chatter in recent weeks points to a "near immediate" release revealed tomorrow afternoon, so traders may not have a lot of time to ride their wagers.

Investors looking to dump their stock (or possibly even short Apple) when the new iPad is available will be flying in the face of a stock that has been a tremendous winner over the past year. Whether or not the stock dips over the course of a few trading days, the smarter bet is that Apple's shares will be even higher when the next iPhone or iPad comes out.

Things may also be different this time. Unlike the first two iPad rollouts, most analysts believe that Apple will continue to sell a scaled-down version of the iPad 2 at a price point that may compete with the entry-level tablets put out by Amazon.com (Nasdaq: AMZN  ) and Barnes & Noble. Research In Motion (Nasdaq: RIMM  ) has also tried to move its fledgling PlayBook tablets for as little as $199. Millions of RIM's tablets were sold over the holidays, and it's not a fluke. Pacific Crest analyst Chad Bartley revised his target for Amazon's Kindle Fire higher last month. He now sees the online retailer selling 14.9 million units this year.

There's a chance that tomorrow's Apple announcement may be better -- and with healthier long-term implications -- than past unveilings.

Sellers beware.

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The Motley Fool owns shares of Amazon.com and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com and Apple, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (7) | Recommend This Article (2)

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  • Report this Comment On March 06, 2012, at 2:25 PM, EquityBull wrote:

    Why ask this question in a headline grabbing attempt? Fool.com should be more objective in its articles.

    This is what lawyers do to plant a seed in a jury's mind about a defendant's actions. Why not ask "How big might the iPad announcement drive apple's stock up?" or "Will the iPad be the catalyst to proper Apple over $1,000/share?".

    I think all these negative and positive headlines are useless.

    The article here then goes on to warn sellers to beware. Does that jive with the attention grabbing negative headline "Will Apple Suffer an iPad Letdown?" Not really.

    Fool.com used to be more about helping the small investor. In some areas and times it still does a great job and has helped me tremendously. I spend a lot annually on 3 newsletters for ideas (but do my own homework on those ideas). However at times it seems more about driving their own revenue (endless promos for SuperNova). I understand they have to run a business but the ads and marketing push has gone from tasteful to over the line all too often IMHO. I'm still a fan and hope management chases the customer and not the dollars. If you serve the customer the dollars will follow

  • Report this Comment On March 06, 2012, at 2:43 PM, ConstableOdo wrote:

    I've said it before and I need to repeat it. Everything disappoints tech critics. These people are not be trusted on liking anything that makes the average non-tech consumer happy with their purchase. Tech critics are only looking for whizbang features that they think are necessary for their arrogant egos. Consumers are not that nitpicky. Consumers just need a good product that works well for them. They need a dependable product that they can get good customer service for. They do not need cutting-edge products with fancy features consumers going to have a problem using. The iPad will not be a letdown for those consumers looking for a top-notch tablet.

    Apple does not make disappointing products. They're good, solid products that operate as they should. Any tech critic that says otherwise is either stupid or a liar. Apple does not mainly sell products to satisfy tech critics. Apple builds products that most consumers will be more than satisfied with. Apple doesn't sell the perfect product. No company does. Apple makes about the best products it can for the consumers they're trying to reach.

  • Report this Comment On March 06, 2012, at 5:21 PM, prox01 wrote:

    No one can compete with Apple Siri? I strongly disagree. Google's voice recognition is far superior in understanding and dictating the English language. I see greater success with accents and background noises when registering words and grammar. The artificial intelligence that registers your voice when Google's voice recognition is leaps and bounds superior than Siri. Not to mention it was introduced in 2008 in Android 1.0. Sure it may not have some pretty female voice responses nor does it have witty responses. But Google's voice recognition works, and it works well in returning what you really want for an answer.

    Ever tried to use Siri in a environment with lots of backgrounds noise? Complete failure.

    Ever use Google Voice Actions with lots of background noise? Pretty impressive.

    The most important thing we, as consumers, should be thankful for is competition. Without it the products and services would never advance because there is no reason to compete to be the best. As long as Android and iOS exist, the winner will always be the consumer.

  • Report this Comment On March 06, 2012, at 8:01 PM, jelp2 wrote:

    On March 06, 2012, at 3:41 PM, InfoThatHelp wrote:

    Siri kills the keyboard. By using fluent natural English to use the iPad and iOS apps, the keyboard-dependent Blackberrys are history, as are the keyboard & mouse PC.

    So what you are saying is, Apple products are for entertainment purposes only. I would be pi$$ed off if I'm giving a presentation and some jack@ss is talking to his device to take notes.

    I guess sending that confidential email by dictation is great too. Apple has enough security issues and now you're adding to the list.

  • Report this Comment On March 07, 2012, at 11:09 AM, mountain8 wrote:

    I like the idea, but has anyone projected the noise level, say in Grand Central station, or any pro sports game, if everyone attending were using their siri at once?

  • Report this Comment On March 07, 2012, at 11:20 AM, 48ozhalfgallons wrote:

    My reasoning is so much better using a keyboard than using my mouth. Every politician and Rush Limbaugh all desperately wish they could have typed something stupid before saying it.

    GVR and Siri are going to introduce communication mores comparable to television and rap replacing books.

  • Report this Comment On March 07, 2012, at 11:21 AM, DJDynamicNC wrote:

    It should be noted that Siri is still technically a beta release, NOT the finished product.

    This is very unusual for Apple (by contrast, Google does this all the time) and I'm not sure how I feel about it.

    At any rate, the big question is how much oxygen the new iPad sucks out of Apple's supply chain. if they can maintain iPad 2 production quotas while still meeting iPad 3 demand, then they are set to kick the Kindle Fire's legs out from underneath it. But I have strong reservations about their ability to maintain that kind of output, which means it's more likely you're going to see a rapid diminishment of iPad 2 stocks as the iPad 3 or HD or whatever takes over. That's fine, but not nearly as good for the bottom line.

    We'll see though, it's hard to say and it's lower-case foolish to underestimate Apple.

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