Wednesday, March 9, 2011

JPMorgan (JPM), iPad (AAPL) and (MMI) (RIMM) Tablet Bubble Bursting

With the positive response to Apple's (NASDAQ:AAPL) iPad 2, JPMorgan (NYSE:JPM) says the tablet bubble could burst, leaving competitors like Motorola Mobility (NYSE:MMI) and Research in Motion (NASDAQ:RIMM) struggling, as they may be producing far too many tablets for the market.

JPMorgan analyst Mark Moskowitz said, "In our view, the technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan."

Moskowitz believes the number of tablets being made will be at about 65.1 million, far above his original estimate of 47.9 million. He sees a potential oversupply of up to 51 percent.

"Based on our research inputs, tablet makers eager to emulate Apple’s meteoric start are trying to secure components with inflated build plans," Moskowitz added. "Of note, glass displays, processors, and, to a lesser extent, NAND Flash are the components that could be most at risk."

Consequently, he also sees suppliers of components having the most to lose in that scenario.

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