Now we have a new call from Gabelli & Co. this morning after Apple’s blow-out earnings report.  Gabelli cited strong gross margin driven by lower commodity and component costs, as well as a higher mix of iPhone sales and strong sales growth in retail and Asia Pacific.

Gabelli raised its gross margin projections from the lower 40s to closer toward mid-40s and it sees favorable pricing through at least the end of 2012 in displays, NAND flash memory, DRAM, and hard disk drives. Gabelli said that the valuation remains very compelling at 5.3-times 2013 EBITDA and 9.4-times 2013 EPS estimates.

While Gabelli does not imply formal price targets in its “private market value” its PMV for 2013 is $1,180 for the stock based its 14-times forward earnings plus its mountain of cash.

In another call, Canaccord Genuity raised its price target to $775 from $740 this morning for Apple shares.

Apple shares already cost more than the bulk of its products.  Maybe 1 share of Apple stock will ultimately end up costing more than the Mac computers.

JON C. OGG

Google said “This new model can be purchased as an unlocked device without a service plan.” That may make AT&T unhappy because Nexus One customers may not sign up for its two-year subscriber program.

Tech website Flurry recently reported that Google has only sold 135,000 Nexus One handsets in its first 74 days on the market.  Several days after its initial launch, Apple (AAPL) sold one million iPhones and the Motorola (MOT) Droid, powered by the Google Android operating system, sold 1.05 million units.

Google may have permanently undermined sales of the Nexus One by offering awful customer service in the period just after the phone was released. The New York Times reported that many people who bought the handset were particularly vocal in denouncing Google’s treatment. One of the search company’s executives said that his company was indeed not adequately helping customers who had problems with the Nexus One.

Now, Google can combine its poor Nexus One customer service with the terrible 3G network run by AT&T and no one who buys the newest version of the handset will be happy.

Douglas A. McIntyre

The iPad will be able to run any of the over 140,000 applications already available at the App Store.  Certain applications that have been hugely successful on the iPhone platform will not do well  the iPad.  Popular GPS programs like TomTom U.S.A. lose their convenient appeal when they are moved to a device bigger than an iPhone.  Other applications simply do not benefit from having a larger screen.  For instance, the popular game iMobsters by Storm 8 does not have a sophisticated graphic and control interface that would benefit from a larger platform.

But, there is another class of application that will benefit tremendously from the larger screen featured on the iPad.  The following games and applications most likely to be immediate and tremendous successes on the iPad platform and also the most obvious candidates for modification to suit the iPad specifically.

1.  Grand Theft Auto: Chinatown Wars, Rockstar Games ($9.99)  The Grand Theft Auto series has been the gift that keeps on giving for Rockstar games.  On virtually every platform where the game has debuted it has been a smash hit.  The iPhone platform has been no different.  Since its release at the App Store one week ago it has rocketed to No.1 on the list of top grossing applications and has  received almost completely positive reviews.  The appeal of this family of games has always come, in part, from its immersing game experience.  The bigger screen and more powerful process on the iPad will allow for a gaming experience more akin to the versions of Grand Theft Auto found on more traditional platforms.

2. Need for Speed Shift, Electronic Arts ($6.99)  EA Games (NASDAQ: ERTS) was invited to present at the unveiling of the iPad, and this was the game they chose to test run.  The EA presenter claimed that the increased processing power and screen size of the iPad really shows the full potential of the game.

3. Tap Tap Revenge 3, Tapulous (Free):  This popular game is similar to Guitar Hero and ROCK BAND on the iPhone platform.  You can download the game for free but have to pay to add new songs.  This is a game that could be hit or miss if it were to be played on an iPad without modification.  It may be hard for consumers to use their hands correctly on a screen larger than the iPhones’.  However, this is a game that should be easily modified for the iPad.  Additionally, the larger screen featured on the table opens up the possibility of having two players on the game device, which may further increase the game’s appeal.

4. Madden NFL 10 by EA SPORTS, Electronic Arts ($6.99)  Capitalizing on the consistent success of the Madden football franchise, EA SPORTS has introduced a successful mobile version for the iPhone.  A quick glance will show you how much the game would benefit from the iPad’s larger screen and faster processing power.

5. Command & Conquer – Red Alert, Electronic Arts  ($6.99)   Command & Conquer Red Alert. Developed by Electronic Arts and distributed for $6.99. Released October 16, 2009. EA has brought its hits real-time strategy game to a mobile platform. In this game the Soviets and the Allies duke it out control of the world.  While this game drew a lot of attention when it was first released, it has tapered off some.  The nature of real-time strategy games is such that a screen the size of the iPhone’s is very restricting.  This game should be significantly more playable on the iPad.  Electronic Arts and other developers with real-time strategy games in their stables should also be able make some excellent versions designed specifically for the iPad.

While these games seem to have what it takes to make it on the iPad relative to other applications at the App Store, success in absolute terms will ultimately depend on the iPad itself.  At $499 Apple may have priced the iPad competitively enough to drive mass adoption.  If it proves to be too pricey, application developers might not find programming for the device to be worthwhile..  Either way, it will be a while before iPad market comes anywhere near the 75 million iPhone and iPod Touches that are out there, so the initial revenue potential is very limited.

Garrett W. McIntyre

gdgt live: Best pictures I have found.  Every feature and presentation was documented, including the gaunt-looking Steven Jobs.

Wall Street Journal: Best commentary I have seen, though largely lacking in the photo department.

Engadget: Almost purely photos of the event.

Business Insider: Calls the new iPad “a yawn”.  Not impressed with the idea of a big iPhone.

New York Times: Sifts through all the confusion and explains the new device, its features and presentation, concisely.

Garrett W. McIntyre

ChangeWave Research recently conducted a survey to gauge the impact of the Apple Table’s impending release on consumer behavior.  The survey found that 4% of the 3314 respondent were “Very Likely” to purchase and iSlate, while 14% indicated that they are “Somewhat Likely” to buy one.  ChangeWave points out that they had an identical response from consumer when they conducted a similar survey conducted in August 2005, prior to the release of Mac computers featuring Intel processors.  Of those respondents that indicated they were interested in purchasing and Apple tablet, 75% said they would be willing to spend $500 or more, while 37% said they were willing to spend $700 or more.

In that 2005 survey 37% of respondents indicated that they would delay their purchases of a Mac until the Intel models became available.  ChangeWave found that number to be significantly smaller in the case of the iSlate, though their data indicates that some planned Mac buyers are holding off.

While the survey indicates strong consumer demand for the kind of product Apple is anticipated to release, the devices functionality will ultimately determine its success.  A report in today’s Wall Street Journal indicated that Apple has lofty aspirations for their new product.   Tune in on January 27th to see if Apple can beat the hype.

Garrett W. McIntyre

Microsoft has a chance to kill the Zune with a good excuse. By cutting prices on its Xbox 360 last week, it is putting pressure on the margins of its "devices" division.

In its last fiscal year, Microsoft made a little more than $400 million on revenue of $8.1 billion in the part of the company that makes and markets hardware. Those numbers seem OK, but in the two previous years the unit lost $2.5 billion. Wall St. hates the business almost as much as it hates Microsoft’s MSN online operation. Investors want the company out of areas where it looses money and has few prospects for improvement.

The Xbox 360 price cut is a sensible risk. If dropping the cost of the product picks up market share from Sony and Nintendo, the move has the benefit of moving Microsoft further along in an area where it is doing well.

The Zune is another matter. Apple’s lead is too large. The Zune is not a product which is terribly different from its competition.

Microsoft can simply say it does not want to take a bath on the Zune while it is taking a more intelligent risk with Xbox profitability.

Kill the Zune. Save some money.

Douglas A. McIntyre

Apple shares were indicated higher by about 0.7% pre-market, despite the sell off seen in overseas markets and in U.S. futures this morning.  After the open, shares are now up almost 1.5% at $172.90.  Apple shares closed down $3.08 on Friday to $170.42, which was better than the overall market fared.  Shares did hit new intraday highs of $174.63 on Friday.

Since shares were hitting new highs on Friday, you can imagine what the chart says.  During the August market malaise Apple shares closed as low as $117.05, so shares are up over 40% from those levels.  Options do not expire until November 16 after Friday’s expiration, but it appears that option traders are expecting a move of up to a $12.00 to $13.50 range in either direction today.  Speculators are obviously using options as a "cheaper" way of trading the stock, because there are over 100,000 contracts listed in the open interest in the closest strike prices for November.

We just noted this morning how Strategy Analytics was predicting that Apple and AT&T would deliver 1.1 million iPhones in Q3, bringing sales to 1.325 million units.  You have to wonder when Steve Jobs is going to split this stock.  As a reminder, we are less than 5-days out from its new Mac OS X Leopard launch as well.

We recently covered how Apple was growing its worldwide computer shipments, and Gartner said that last quarter’s Mac shipments rise 37% to roughly 1.3 million units.  If that is accurate, Apple’s computer market share is now 8.1%.  Apple was also listed as one of our key window dressing stocks and Jim Cramer has it as one of his "New Four Horsemen of Tech," although recently he noted how some of these may see some expected profit taking.

Jon C. Ogg
October 22, 2007

We just noted this one as one of the huge Window Dressing Stocks that was a large beneficiary of fund buying.  Based upon a $98.00 mid-morning price, since the June 29 date shares are up 47%; but if you go merely one day before the end of the last calendar quarter shares are up a monster 77%.

It is never easy standing against the crowd and it is never easy saying hi-flyers have run too much.  It is possible to stand against the crowd, but stocks have shown time after time how sometimes they will keep rising despite performance and despite valuations.  But it is hard to imagine that there isn’t going to be some profit taking.  RBC Capital Markets just downgraded this Monday saying R-I-M was hard to see higher prices for the time being.  The average target is roughly $100 now, although there are higher targets.   Jim Cramer said recently that he expects some profit taking in these names that are up big, mostly from his "New Four Horsemen of Tech" stocks.

The BlackBerry is still more business-focused, but what we are rally trying to look at is how large the global total is that the company can take.  It has leaped over the Palm Treo from Palm Inc. (NASDAQ:PALM) and the iPhone, for now at least, has been less of a business focus and is still in the the very early stages of its 20 million unit target where R-I-M is trying to counter the advance.

We would expect some profit taking as the obvious move, but we aren’t going to try stand in front of a freight train.  This one has just had way too many gap-ups on earnings before.   With new versions of its PDA smartphones having hit the market, we aren’t going to try to outguess the guestimates for shipments and subscribers.  We are still trying to factor in a longer-term estimate of the total global market opportunity for R-I-M and we aren’t alone. 

The $55 Billion market cap sounds giant, but it depends upon how you view its global opportunity in the years ahead.  Another wild card today will be the impact that the weak US Dollar had.  Research in Motion is based in Canada, derives much of its sales in the U.S., and now has global sales with most major global wireless carriers.

Jon C. Ogg
October 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers. 

We’ve already gotten the iPhone, we’ve already seen new PC announcements, we’ve already been given the delayed launch date of the Leopard operating system, and we are still viewing the TV initiative as a hobby as Steve Jobs called it himself.  Unless Apple is going to shock the you know what out of everyone with a new unknown and undiscovered product, this iPod revamp makes more than perfect sense.  Consumers want it too.

Back in April, Apple said it had sold its 100-millionth iPod.  This goal is probably to hit 200 million units if it wants to keep driving the stock.  We think this may be more of an iPhone-esque iPod, but without the phone.  So we’d be looking for more touch screen and hopefully some more Wi-Fi features.  We’ll know in a few hours.  Here is what some of our tech friends are saying around the web today:

Business 2.0: wide-screen, touch-sensitive iPod, iPod nano with a larger screen, iPod Shuffle with more memory for the same price….

Engadget: Rick Rubin proclaims "the iPod will be obsolete"
Apple to unleash "The Circle" concept tomorrow?

Newsday.com: What’s coming next from Apple?

CNET: "The iPod is growing up: If Apple really is putting a version of Mac OS X in a new iPod, presumably it has more in mind than showing high-quality reruns of The Hills."

Think Secret: Touch-screen iPod to take center stage

San Francisco Chronicle: What news awaits the Apple faithful?
Speculation centers on redesigned iPods, expanded content offerings on iTunes

After the recent Zune price cuts, you have to wonder if Microsoft (NASDAQ:MSFT) is holding on to this space with looser hands and maybe just as a hobby.  And as far as Creative Tech (NASDAQ:CREAF), everyone now only asks "Who?".

Jon C. Ogg
September 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Wal-Mart is one of the first major retailers to offer MP3 digital tracks with music content from major record labels such as Universal and EMI Music, and the launch is aimed to get into the space of Apple (NASDAQ:AAPL) and Amazon.com (NASSDAQ:AMZN).  Wal-Mart’s new MP3 music catalog includes hundreds of thousands of songs and albums, and will be continually expanded with additional mainstream and independent music content. Also, Wal-Mart is currently offering special MP3 album pricing on hundreds of album classics.

It used to be that once Wal-Mart went after your space that things became instantly worse for you and your other competitors.  But after the Wal-Mart woes of late, they just don’t seem able to wrangle away customers at the same rate.  In fact, many may now chuckle at new initiatives because its online presence is still too small to be a major factor.

Steve Jobs and Jeff Bezos probably didn’t call each other up in a panic this morning, and probably won’t be tomorrow either.  These stocks are even higher on the heels of RealNetworks (NASDAQ:RNWK) launch of a new digital music company with MTV.  We addressed this earlier today.  If these were as threatening as they sound then Amazon.com (AMZN) shares might not be up 3.8% and Apple (AAPL) shares might not be up 4% today.  Getting the huge established tech predators unseated from a dinner table at their favorite restaurants usually takes more than getting a two-top table in the corner.

Jon C. Ogg
August 21, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.