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iPad: Investors shouldn't think short-term

No doubt about it, Apple stock has been on a wild ride since yesterday's iPad announcement. Investors were hoping Apple would deliver big, and while many Wall Street analysts believe they hit a home run – thanks in large part to not just the technology, but the price point of the device – the stock took a large dip today. On news of the iPad, AAPL closed at $207.88 yesterday. Today the stock lost over 4% to close at 199.29.

Why? Well, most of the time there's a huge sell off after Apple announces something new. A majority of the sell off is because people generally price the stock according to the rumor. It's the old "buy on the rumor, sell on the news" mentality. I've already stated in the past that I believe AAPL is headed past $300, and their latest earnings certainly seem to be pointing in that direction. But how does the iPad fit into all of this?

Frank Cioffi Founder and editor of Apple Investor News has written an interesting editorial for The Huffington Post about what the iPad should mean to investors.

Cioffi (who's long on AAPL) admits that while he's a huge Mac fan, he probably won't be buying the iPad because he's not sure how it would give him anything he doesn't currently have in his iPods, iPhone, or Mac laptops. He goes on to recognize that if one veteran Apple fan doesn't see the iPad as providing something his other Apple devices don't, it can't bode well for the short-term outlook for the iPad, which many investors are expecting to be an iPhone-like megahit. But then he brings up a critical point: the iPad is a slow-growth device.
Apple has just reinvented portable entertainment and mobile computing. No, it's not "magical," as Apple claims, but it is an elegant form factor that will engage niche industries to create apps for their businesses. It will likely become a hit with educators... just as Apple started the decade with the iPod, which grew slowly into an iconic device, I predict the iPad, after initially underwhelming investors, will also grow over time and indeed create a new device category. But it will take time... Apple is planning for the long haul. This company has moved beyond an e-reader and created an e-entertainment device.
Cioffi also points out one thing investors should be even more ecstatic about than the Apple tablet – Steve Jobs' weight. He's looking like he gained some (not a lot, but some) and IMHO is looking much better than last we saw him.

But what say you? Are we going to be seeing dissapointing iPad Q3 numbers? Will the iPad eventually become the next "must have" tech gear like the iPod and iPhone? Tell us in the comments!

Disclaimer: This author owns shares in AAPL. Opinions in this post are those of the author only and should not be considered as investment advice.

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Apple Financial

No doubt about it, Apple stock has been on a wild ride since yesterday's iPad announcement. Investors were hoping Apple would deliver big,...
 

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Neil Anderson

I was thinking of buying one iPad. But after watching the Keynote with my wife and kids I think I'll be buying four. :)

January 31 2010 at 5:05 PM Report abuse rate up rate down Reply
Average White Boy

The iPad will appeal to toddlers and seniors and most non-tech oriented consumers in between. It's a very versatile device even if it doesn't excel at anything in particular. It's about as middle-of-the-road device as you can get. It would have been nice to get a SDHC slot and USB onboard instead of a couple of dongles. Still, with 802.11n, file transfers should be fairly fast as should be video streaming. Guaranteed, Apple will sell 5 million tablets in the first year regardless of some of the flaws that tech people are mentioning (no multitasking or Flash playback). There doesn't seem to be much griping from the millions of iPhone or Touch users who also don't have those capabilities.

Apple has hit another home run and I'm definitely going to buy an iPad. It appears I'll have to buy the top model if I want a lot of memory and GPS services.

January 31 2010 at 12:39 PM Report abuse rate up rate down Reply
Gerry

First off I dont know why people are looking for a camera. This is geared for reading books with the ability to access other functions as email, internet, photos, etc. I disagree with the statement you can do the same on the Ipad as you can with your Mac. Wrong...You cannot use any apps on your Mac as you can on this device. So in turn what is the advantage of this device? A bigger screen and the new bookstore. I use my apps on a daily basis and would love to use them on a larger screen. I am excited about this and it will just keep getting better and better as Apple sends us those updates with more capability.

January 30 2010 at 9:33 AM Report abuse rate up rate down Reply
thomas mcintosh

I think the "no multi-tasking" is misleading. I can listen to iTunes and browse the web. I just can't run multiple apps. To me, Not a big deal.

If there was a (front facing) camera, I would be buying "his and hers" iPad's the minute they come out. I just don't understand why they didn't include one. Even my 2G original iPhone has a camera...

I will not be early adopter this time for that reason alone. Otherwise I think it is a perfect gizmo for people like my wife who only use their laptop to:
surf the web
listen to iTunes
check email

It is perfect for that use case.

January 29 2010 at 4:31 PM Report abuse rate up rate down Reply
Eideard

Cripes, someone writing about Apple who also knows something about market incompetence regarding tech. You can expand the remarks to include most of NASDAQ.

Nice to see.

BTW, yes I own AAPL. Last time I bought it was at $89. :)

January 29 2010 at 4:13 PM Report abuse rate up rate down Reply
roselinke

the apple brand is a solid one: http://onthebutton.wordpress.com/2010/01/28/ipad-a-terrible-name/

January 29 2010 at 2:33 PM Report abuse rate up rate down Reply
Jamie

The iPad couldn't be more perfect for my needs. I drive for a living and was thinking about buying a cheap used Macbook Pro to serve as a Netbook for maintaining blogs. It's a pain to do with my iPhone, and I am away from my Mac Pro most of the time right now. Everything else can be cloud based on the 3G.

What I am wondering is why nobody is talking about the Apple A4 chip!!!! I have a feeling that is the start of something huge.

Long on AAPL since 1999.

January 29 2010 at 2:27 PM Report abuse rate up rate down Reply
Ron Green

I would imagine that the iPad does not do flash or have a camera for video conferences for one reason: bandwidth.

January 29 2010 at 2:15 PM Report abuse rate up rate down Reply
geoffb4

I think that there are at most a thousand people who have actually touched this device. If I know apple products (and I do) looking at this thing online and reading reviews of it will do NOTHING for it's mass appeal. This is something that needs to be held and played with before criticizing.

With the market as fickle as it is, it's no wonder that the stocks are dropping. I have no idea what people actually wanted. What could Steve have introduced that would make the stocks go up?

We sit back and scoff at its lack of a camera, no multitasking, and ridiculous name. But the truth here is that barely anyone has a product like this at home, so we don't really know what it needs. I think the iPad is a kick ass product. for $499, consider it a done deal.

January 29 2010 at 1:58 PM Report abuse rate up rate down Reply
Marc

Hey, who needs an iPod anyway, I mean there are already things out there that do everything it can do and more. Oops, I meant iPhone, wait, no, iPad, my bad.

January 29 2010 at 12:40 PM Report abuse rate up rate down Reply
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