Please ensure Javascript is enabled for purposes of website accessibility

Is an iPad Surprise in Store for Apple?

By Evan Niu, CFA - Apr 5, 2013 at 10:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors keep fretting over a possible iPhone miss this quarter, but what about strength in iPad units?

Investors should be preparing for a possible Apple (AAPL 4.01%) miss this quarter relative to Street forecasts. iPhone unit sales are expected to post a sequential decline coming off the holiday quarter, and investors remain primarily focused on that device as the big money maker. iPhones were 56% of sales last quarter, so this investor emphasis isn't misplaced by any means.

Still, aren't investors forgetting about the iPad?

Survey says
Cowen & Co. analyst Matthew Hoffman thinks so, reiterating an "outperform" rating today on the iPad maker. The analyst recently commissioned a survey of U.S. households with a sample size of over 1,000 respondents. Of those, 40% of households owned an iPad, which was broken down into 35% owning the full-sized version and 5% owning the iPad Mini.

Hoffman views the figure as evidence that the U.S. tablet market remains underpenetrated relative to the more mature PC and smartphone markets. The iPad just had its third birthday, and has a long way to go on the adoption curve.

Apple updated its iPad line at the very end of last year, including the addition of the iPad Mini that's seeing strong sales due to pent-up demand for smaller form factors. In fact, last quarter iPad unit sales were remarkably robust at 22.9 million, but the strength there didn't offset investor disappointment regarding iPhone units.

The survey also showed that 41% of respondents were intending to purchase an iPad of some sort in the near future. That was a mild downtick from the 43% response from October, but still shows that there's still plenty of incoming demand for Apple's tablet.

Rivals are starting to chip away at Apple's market share lead, but the tablet market is growing so quickly that Apple's still putting up envious unit growth.

I've said it before and I'll say it again: No one appreciates the iPad.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$143.11 (4.01%) $5.52

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.