There….my Henry Blodget moment.
My analysis is very simple:
Apple will end it’s fiscal year in September 2011, with figures roughly like this:
- Revenues: $100 billion
- EBIT: $40 billion
- iPhones sold: 100 million
- iPads sold: 50 million
- Total cash on balance sheet: $100 billion
- Market cap less cash @$400/share: $275 billion
My prediction, which I don’t find particularly bold, is that Apple continues to grow all of these metrics by 100% per year, for the next two years. Let’s break that down implication by implication:
1- This would mean for iPhones: 200 million sold in 2012, and 400 million sold in 2013.
I don’t find that particularly hard to believe – by then the world market for phones will be 2 billion units/year, which would mean Apple would have just 20% market share. And the logistic challenge to build and ship 400 million phones is very feasible – it’s how many phones Nokia was already shipping before starting their death spiral.
2- For iPads we’re talking about: 100 million sold in 2012, and 200 million sold in 2013.
Unrealistic? I don’t think so. It’s a new category and all indications are that it will dwarf the size of the laptop market. The current size of the computer market worldwide is about 150 million desktops and 200 million laptops sold per year. Is it crazy to think there will be just as many “tablets” sold as laptops in 2 years? When I see families with 3 year olds having their own iPads, something unthinkable with laptops, it certainly seems realistic. And in this market, Apple has the advantage of a near monopoly: for the next few years at least, “tablet” = “iPad”.
3- Extras: Besides the iphone/ipad product lines, there are many extras that could support this growth:
- Apple TV – another large global consumer electronics category waiting to be thoroughly transformed.
- App stores – continued growth of the iOS and Mac app stores will become very meaningful revenue streams with the compounded effect of both more devices and more apps spirals upwards
- China – Apple seems to have cracked the one gigantic market all other American tech firms fail to penetrate. By some unknown magic, Apple there sells products, achieves brand love, and gets its patent protection.
Just executing along these lines will create a company in only two years with financials that are surreal:
- Revenues: $400 billion
- EBIT: $160 billion
- 2011 Cash + Cash generated through 2013: $340 billion
Who knows how Apple will choose to use its cash. In any event, if at September 2013 the shares are trading at $2000 (assuming no splits), then the market cap would be….$1.8 Trillion.
Many factors could cause Apple to miss, but what’s astonishing is that this isn’t a forecast for 5 or 10 years, but just 24 months. These numbers seem so surreal that it’s likely one of the main reasons Apple shares aren’t trading higher already today.
There is a very good chance that the world’s largest company by market cap will grow that market cap by 5x in just 24 months. Unprecedented.