Quite an interesting trend of corporations adopting iPad... i first heard about this late last year of a top investment company in spore adopting iPad quite fast and many people bringing it along into meetings and have been endorsed by their IT dept as safe to use. there are even specific apps created for iPhone usage in that company for specific corporate purposes. These employees actually by the iPads themselves...ie. unlike companies that buy BlackBerries for their staff. But if corporates are to buy iPads like a typical executive arsenal of Laptop, BlackBerry, Smartphone... potential is there. See how BlackBerry flew in last 3-5 years.
So now if top corporations are using iPads, it will be a whole new dimensions... you can for eg. download presentation materials onto your iPads.. and you need not bring files of documents into meetings.. things can be retrieved. Video-conferencing etc.. potential is immense.
of cos, Hi-P should benefit if there are more advanced models of iPads that is customised for corporate use instead of mass-market consumption. Note that Hi-P only got Apple as a customer in 3Q last year... there will be quite a few more quarters of good performance especially when old inventories of a terminated program have been written down in 2Q last year. hopefully there are no surprises in glitches.
1Q2011 for Hi-P should also outperformed prior year 2Q2010... if Apple's iPads are selling like hotcakes especially in China, Hi-P may run more shifts even in CNY period - even if not in China but in Spore or other factories so as to meet orders. Apple will have insist that production run as normal... especially now there are floods of Tablets on the market. if there are no stocks of ipads in stores.. consumers may just choose the next available Tablet instead of waiting for a month for iPad... there are more choices. Apple will not want to miss out on this group of customers.
I even have a friend who bought iPad as a gift for his 70 year old father who is not tech-savvy at all but adapted very well to using iPad in reading papers, playing chess etc... user-friendly is important.
Chart-wise: Hi-P has broke out of previous high set in 3Q last year... so effectively there is now no stock overhang. rise in high volume, drop in low volume. good.
management: generally prudent, near to zero debts, net cash company, pays dividends. taking big write-off as evidenced in 2Q2010. I know some companies will delay such inventory write-offs for eternity....
remembered an article 2-3 years back that the CEO wants to grow the company to be the next Venture Corp and achieve sales consistently above Billion dollar... he only achieved that once in 2008 before market tanked.. at least he has the ambitious and guts. so probably now he managed to do it, if not in 2010, will be in 2011.
I also noted that Hi-P's major shareholder is a Nasdaq listed company, Molex Inc, which is also a supplier to Apple. which is probably how Hi-P got the Apple contract.
Just an interesting note: Most people/analyst still assocaite Hi-P's major customer as RIM (blackberry), smartphones as the main revenue source. so probably not many view Hi-P as a iPad manufacturer (yet).
Next thing i should probably analyse foxconn more.
i heard that Foxconn is having negative margins on Apple contracts... anyone can comment? Especially 802 or Winston? Since you guys are intune with US stocks and China market in general. Thanks!I am vested.. so take above with pitch of salt.
(so i am hoping fund managers will read my post here!!!
I cannot be more direct! hohoho!
Straits Times: Jan 25, 2011
Firms buying iPads - a sign of better times
Business spending expected to lead to pickup in jobs market, spark recoveryNEW YORK: The news last week that Apple's chief executive Steve Jobs is taking a medical leave of absence was a big story.
But something else about the company got far less attention and
could be even more important to investors this year.
Corporations 'are adding iPads to their approved device list at an amazing rate,' Mr Peter Oppenheimer, Apple's chief financial officer, told analysts last week.
Apple's products, more known for their consumer appeal, are
now used by employees of Wells Fargo, Archer Daniels Midland, DuPont and others.Splurging on US$500 (S$640) iPads is a sign that the business cycle is starting to turn and that companies are starting to spend a record amount of cash they have accumulated. If the trend is real, firms will do what consumers have not - spark a strong economic recovery. That could push the Standard & Poor's 500 index to its third straight year of double-digit percentage gains. The last time that happened: the tech-boom days of the late 1990s.
'You're going to see a bigger commitment to growth this year because companies have underspent for quite some time,' said Mr Bill Stone, chief investment strategist at PNC Asset Management.
Financial, technology and energy companies are the most likely to benefit from business spending, said Mr David Bianco, a market strategist at Bank of America.
Each group is up about 3 per cent this year, nearly one percentage point ahead of the overall S&P 500. Those three groups account for nearly half of the index's value.
The continued success of financial, technology and energy stocks would point to a new stage of this bull market, which has returned nearly 100 per cent since it began in March 2009.
'Consumers don't have the income growth to sustain a more rapid pace of spending,' said Mr Jeffrey Kleintop, a market strategist at LPL Financial.
Instead, he said, business spending will eventually lead to a pickup in the jobs market.
Corporate spending on technology helped IBM beat analyst expectations last week. Last Tuesday, IBM said that its 7 per cent jump in revenue came in part from companies in the United States upgrading their computer systems.
Energy companies, meanwhile, are leading the market this year with a 3.4 per cent jump due to higher demand, a sign of an improving economy. Oil company Schlumberger said on Friday profit in the most recent quarter rose 31 per cent.
And financial companies are benefiting from loans to businesses, a signal that those companies plan to expand. JPMorgan said on its earnings call last week that it added 400 middle-market companies as new commercial loan customers.
Is it too early to make a prediction that the biggest sectors of the market will continue to do well?
After all, investor sentiment is at a level not seen since the market hit its all-time high in 2007. That makes some contrarian investors nervous.
The market should continue to rise if history repeats itself. Since 1970, the top-performing industry groups in January have gone on to outperform the rest of the S&P 500 index over the rest of the year nearly 75 per cent of the time.
ASSOCIATED PRESS