A 100 pages deep analysis from Credit Suisse on Apple after its release of Ipad 2.

Table of Contents
Executive Summary 3
So What’s Next? 6
The Low-End iPhone—Necessary and Significant 10
Emerging Markets—Time for a Bigger Push? 17
Corporate Penetration—Is the iPad a Trojan Horse? 20
New Revenue Streams? 25
Key Risks - What Could Go Wrong? 29
Can a $320bn Company Actually Outperform? 29
Management Evolution 30
Vertically Integrated versus Open Standards 31
Carrier Backlash—Not an Imminent Risk 32
Regulatory Backlash—Hard to Judge 34
iPhone Success to Continue 35
Smartphones—Robust Segment with Volume Growth 39
Long-Term Addressable Market of ~2bn for Smartphones Long Term 39
Cannibalization of Several Other Consumer Electronics Markets Simultaneously 43
Price Point Penetration Analysis Also Suggests 1.04bn Units by 2015 43
Apple—A Winner in Smartphones 44
Apple Ranks First on Our Scorecard 44
Software—An Inherent Strength 45
Services—Remains the Key to Apple’s Success 46
Distribution and Supply Chain—Key Driver as Volumes Grow 49
iPhone Profitability—For How Long Is It Sustainable? 52
iPad—Targeting a $120bn Market 56
Tablets a $120bn Question Long Term 56
Working Out the Tablet Market; Look by Price Point 58
Tablet Cannibalization Is Not Just About PCs 62
Once in a Lifetime Chance to Break a Monopoly 63
What Does a Tablet Need to Become? 66
iPad Leadership Is Sustainable 68
Operating System Lead versus Peers for Now 68
Priced for Success 68
Vertically Integrated 69
Leveraging the Existing Installed Base 69
Carrier Distribution 69
Applications from the Get Go 70
iPad GM a Detailed Two-Way Study 71
Approach 1: Backing Out an Implied iPad Gross Profit/Gross Margin 72
Approach 2: iPad Teardown and Ramp-Up Toward Long-Term Blended Gross
Margin of ~35% 73
Macs—Share Gainer 75
PC Demand Ex-Tablets to Show Lackluster Growth 76
Apple Has Some Core Strengths to Drive Mac Gains 80
Brand: Apple (10/10)—Synonymous with Quality 80
Scale and Supply Chain: Apple (10/10)—Unique Advantages versus Peers 80
Valuation—FV of $500 per Share 84
P/E Multiple Suggests FV of Close to $474 per Share 84
DCF Analysis Yields a Value of $419bn or $450 per Share for Apple 86
Credit Suisse HOLT™ Implies a Fair Value of $575 per Share 88
Financial Models 91