SAN FRANCISCO (Reuters) - Apple Inc sold more than 300,000 iPads on the tablet computer’s first day in stores, a strong showing that roughly matched Wall Street forecasts and mirrored the iPhone’s debut in 2007.
Despite a solid opening weekend, which prompted several investment banks to raise their earnings and revenue forecasts, the bigger test will come later this year, as consumers outside the company’s core fan base size up the iPad.
Questions remain about whether consumers will shell out $500 or more for a device that fits between a smartphone and a laptop, and which Apple hopes pioneers a new class of device.
It hopes the sleek iPad joins the iPod and the iPhone in its stable of successful consumer products, providing the next driver of growth as sales of its multimedia player and smartphone begin to moderate.
Should it take off, the iPad would not only provide a new market for component makers, but another platform for which software developers and content companies would hawk their wares.
Time will tell whether Apple has another bona fide hit on its hands, but media companies like New York Times Co and News Corp are betting the iPad will erect a profitable bridge from print to digital content.
“The launch went pretty much as expected; it was well received,” said Shannon Cross of Cross Research. “There is widespread enthusiasm for the product, but it’s a new category, and it will take time for people to understand it.”
Apple has staked its formidable reputation on a 9.7-inch touchscreen tablet with no clear-cut case for use other than pure media consumption. Rivals including Hewlett-Packard Co and Dell Inc are preparing tablets of their own later this year, so consumers will have a range of choices, particularly in the crucial holiday period.
“From a bigger strategic picture, the iPad is a content gatherer for Apple; that’s what separates it from the others,” said Broadpoint Amtech analyst Brian Marshall. “This has been a successful strategy for Apple in the past with iTunes,” the company’s online music store.
Many analysts believe the company likely sold 350,000 to 400,000 iPads for the weekend. A number of Apple stores in the United States were closed for the Easter holiday on Sunday.
At least four brokerages full-year earnings estimates and price targets for Apple following the iPad launch.
Following the launch, JPMorgan raised its price target on Apple stock to $305 from $240; Kaufman Brothers increased it to $295 from $253; and Thomas Weisel Partners lifted its price target to $280 from $270. Susquehanna raised its price target to $275 from $260, while Barclays kept its target unchanged at $285.
Shares of Apple closed up 1.1 percent at $238.49 on the Nasdaq, close to its all-time high of $238.73. The stock ran up last week in anticipation of the debut of the tablet computer on Saturday.
Apple’s shares now trade at around 20 times forward earnings. The median analyst price target on the company is $280, according to Thomson Reuters I/B/E/S.
BMO Capital Markets analyst Keith Bachman called the first-day sales figure “reasonable, but not a blowout number.”
He said the iPhone sold at a similar pace to the iPad in the early going. iPhone sales passed the 1 million mark after 74 days in 2007.
Apple’s first-day iPad sales included deliveries of pre-ordered iPads to customers — which may have helped depress opening day crowds at some locations — as well as shipments to sales partners and sales at Apple retail stores.
“I don’t think investors should expect this to be an overnight sensation,” said Oppenheimer & Co analyst Yair Reiner.
“Apple sold to the first 300,000 buyers, they were the easy ones,” he said. “The next 10 million will be a lot tougher. For a lot of those incremental buyers, the use case has yet to be made.”
Analysts expect the company to sell 1 million or more iPads in the current quarter ending in June. Wall Street expects the company to sell around 5 million in 2010, although estimates vary widely.
Only the Wi-Fi version of the iPad went on sale Saturday, and only in the U.S. Apple will expand to nine international markets, and roll out a 3G-compatible iPad, later this month, with wireless service from AT&T.
Media companies are not the only ones counting on the success of the iPad. Companies found to have supplied some of the key components to the iPad received a boost in trade on Monday [ID:nN03146377].
Those include Samsung Electronics Co Ltd, up 1.5 percent; LG Display Co Ltd, up 2.2 percent; Broadcom Corp, up 4.5 percent; and Texas Instruments Inc, up 3.1 percent.
An analysis by teardown firm Chipworks also identified chips in the iPad from suppliers such as Cirrus Logic Inc, which jumped 8 percent Monday, Atmel, Linear Technology, Intersil, and STMicroelectronics.
Others may be quaking. Susquehanna Financial analyst Jeffrey Fidacaro said the iPad was likely to take share from Amazon.com Inc’s Kindle because of its robust e-reader capabilities. Amazon shares were off 0.2 percent.
There did not appear to be any supply issues on the iPad’s opening weekend, as some had feared, with only a few reports of stores selling out, as was the case during the iPhone’s launch.
Long lines and boisterous crowds emerged at Apple stores in big cities such as New York and San Francisco, but some stores in suburban areas were not as crowded.
Apple said iPad users downloaded more than 1 million applications from the company’s App Store and more than 250,000 ebooks from its iBookstore during the first day.
Additional reporting by Franklin Paul in New York and Supantha Mukherjee in Bangalore; Editing by Edwin Chan and Gerald E. McCormick