Microsoft Office For iPad Is A Boon For Apple

Summary
•Microsoft has finally made its Office software available for Apple iPad.
•The Microsoft Surface tablet will be rendered all but obsolete.
•Apple stock is still a solid long-term investment.

The Bottom Line

The Office for iPad event should be interpreted as a de facto victory for Apple. Legendary investor Warren Buffett may opine that the moat is still expanding at Cupertino. Again, shareholders may expect for Apple to sell 80 million iPads through 2014. By itself, the iPad platform would then generate $36 billion in sales, if the tablets were to move at a $450 per unit average. In all, Apple appears poised for high single-digit revenue and profit growth through 2014, because no Apple iPad/iPhone killer exists upon the near-term horizon. Larger screens for the iPhone 6 will help Apple compete effectively alongside the phablet movement. Reuters recently reported that the looming iPhone 6 launch would branch off into two separate 4.7-inch screen and 5.5-inch screen handsets.

Apple, of course, has remained a cash machine in recent years. Apple closed out its Q1 2014 books with $158.8 billion in cash and investments above $95.5 billion in total liabilities on the balance sheet. Be advised that Apple liabilities did include $11.4 billion in deferred revenue. This deferred revenue will ultimately be booked as sales, which would leave $84.1 billion in liabilities. Apple may then still carry $74.4 billion, or $80 per share, in cash and investments after theoretically paying off all liabilities. Apple shares did change hands at $542.55 at the end of the April 2 trading session. Apple trades for a relatively cheap 11 times estimated earnings, after backing out its financial liquidity.

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