Gene Munsters' 10 Steps to $1,000 Apple (AAPL) Shares

May 25, 2012 4:07 PM EDT
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Investors in Apple Inc. (Nasdaq: AAPL) responded to a call from Piper Jaffray's Gene Munster which highlighted the treacherous trek for the stock to get to $1000.

Keeping it simple, Munster lists them in no particular order. But first, our own quick list:
  1. Sell lots of iPhone and iPads
  2. Double that
  3. Introduce smaller iPad
  4. Raise iPad 2 price back up/stop producing it
  5. Sell iPad 1 in Vietnam
  6. Cut Tim Cook's pay to $1
  7. Raise CNBC's pay to $3 million annually. We've not heard nearly enough on Apple from that station lately due to the IPO of some "VisageBrochure" social media site, or something like that.
  8. Instead of 'i'-ing everything, replace with 'u,' or 'me.' "Anyone going out to get that new mePad?"
  9. One word: Iceland
  10. Double the price of the iPhone, or demand increased subsidies
  11. An iPad/MacBook Hybrid which runs on souls.
Anyway, on to Munster:
  • Product Roadmap for 2012 - There will be meaningful updates to Apple's core product lines, a move Munster is 110 percent behind.
  • Apple's next iPhone - Is Munster still confident in Apple's next mobile device offering? Check.
  • Apple Television - Munster thinks an Apple TV set might debut in December 2012, effectively "freezing" the market during the critical holiday shopping season. The TV might be 42- to 55-inches and cost $1,500 to $2,000.
  • Phone Subsidies - Munster sees subsidies as remaining unchanged over the next two to three years, amid market chatter otherwise.
  • Gross Margins Over 40% - With the iPhone having a 60 percent gross margin (compared with 40 percent on the iPad an 25 percent for Macs), Munster sees Apple easily maintaining this level.
  • "Heart transplant" strategy - the phasing out of older products, which Apple sees as key.
  • China adoption curve - Thinks iPhone activations in China will not see the same slowdown as the U.S.
  • Tablets eclipsing PCs - This is pretty straightforward.
  • Enterprise strategy - Munster expects consumer desire will transfer over to enterprise adaption. He noted Apple considers consumer and enterprise two different verticals.
  • Services (iTunes Store, the App Stores, and iCloud) - Services will continue to enhance the Apple ecosystem without need to produce substantial profits on their own.
Munster maintains an Overweight rating an $910 price target on Apple shares.

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