Zacks Analyst Blog Highlights: Apple, Motorola Mobility Holdings, Research In Motion, Tata Motors and Ford Motor

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Mar 17, 2011, 09:30 ET

CHICAGO, March 17, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Apple Inc. (Nasdaq: AAPL), Motorola Mobility Holdings Inc. (NYSE: MMI), Research In Motion Ltd. (Nasdaq: RIMM), Tata Motors Ltd. (NYSE: TTM) and Ford Motor Co. (NYSE: F)

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Here are highlights from Wednesday's Analyst Blog:

Apple Delays iPad2 Launch in Japan

Apple Inc. (Nasdaq: AAPL) is postponing the launch of iPad2 in Japan, following the earthquakes and tsunami that hit the north-eastern coast of Japan on March 11. The company has also been forced to close down a retail store in the quake-affected city of Sendai.

Apple had planned to release the tablet computer in Japan and 25 other countries on March 25. Apple did not set any new release date for Japan, but said that it will go ahead with the launch of iPad 2 in other countries like Germany, Belgium and the United Kingdom.

The iPad product line is the fastest-selling technology product in history, in terms of revenue, according to Creative Strategies Inc. Analysts believe that Apple may have sold more than 500,000 iPad2 in its debut weekend, after retail outlets ran out of the tablet-style device since its arrival on March 11.

Apple sold more than 300,000 iPads on the very first day of launch in April, 2010. The company sold more than 15 million units in the first nine months of launch, including 7.3 million units to holiday shoppers during the December quarter.

Apple reported sales of about $4 billion in Japan (6.1% of the total revenue) in 2010. Approximately 5.0% of Apple's revenue came from Japan in the December quarter. Revenue from the country rose 83.0% in the period to $1.4 billion.

According to Piper Jaffray, iPad2 sales are expected to surpass the previous estimate of 5.5 million units for the current quarter, which ends on March 31, 2011. We believe that the iPad2's international roll out will be equally successful.

Despite the decline in Apple's market share in tablet computers (down to 73.0% from 93.0% in the September quarter), research firm IDC expects the company to maintain 70%–80% market share through 2011, primarily due to the launch of iPad2. Based on IDC estimates, Apple will ship a minimum of 35 million tablets in 2011.

Piper Jaffray estimates that revenue loss from the Japan crisis will be negligible in this quarter, at less than 1.0% of sales. For the June quarter, the negative impact is expected to be less than 3.0%.

Recommendation

We believe that strong demand for iPad2 will provide Apple a competitive edge, even as competitors, including Motorola Mobility Holdings Inc. (NYSE: MMI) and Research In Motion Ltd. (Nasdaq: RIMM) continue to introduce tablet computers to compete with iPad2.

We continue to believe that Apple will outperform its peers given its strong iPad and iPhone sales and new product launches. With a loyal customer base, international expansion, competitive pricing strategy and solid cash in hand, we remain positive on its long-term growth.

However, a prolonged crisis in Japan, particularly a nuclear catastrophe can affect Apple due to supply shortages, particularly for components like flash memory.

We have an Outperform rating on Apple over the long term (6-12 months). Currently, Apple has a Zacks #2 Rank, implying a short-term Buy rating.

Tata Motors Sales Up 18.4%

India's auto giant Tata Motors Ltd. (NYSE: TTM) posted an 18.4% rise in sales of wholesale vehicles to 102,411 units in February. Out of this, commercial vehicles, including Tata, Tata Daewoo and the Tata Hispano Carrocera, totaled 46,747 units, a growth of 10% from the prior year. Meanwhile, passenger vehicles totaled 55,664, up 18% from the same month in 2010.

Sales of Jaguar and Land Rover rose 26% to 21,653 units on the back of a 33% increase in sales of Land Rover models. Sales of Jaguar models slid 2% to 3,213 units while that of Land Rover models escalated 33% to 18,440 units.

Tata acquired the two U.K. brands from Ford Motor Co. (NYSE: F) for $2.3 billion in 2008. The automaker expects to invest INR 73 billion ($1.60 billion) for research and product development on these brands.

Tata reported a 272.8% jump in consolidated net profit to INR 24.24 billion ($526.5 million) in the third quarter of its fiscal year ended December 31, 2010. The company's sales increased 21.6% to INR 315.06 billion ($6.84 billion) from the same quarter in 2009. The operating profit margin grew by 270 basis points as operating profit surged 51% to INR 44.89 billion ($975 million).

The improvement in results was attributable to strong volumes of Jaguar and Land Rover, cost reduction measures, favorable currency movements and better product mix.

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