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Apple Targets Old Foe Microsoft With Smaller iPad Pro

Apple ( AAPL ) took aim at old rival Microsoft ( MSFT ) on Monday as it unveiled a new tablet computer that it believes can be a replacement for millions of older Windows notebook PCs still in use. Most headlines from the spring product launch event focused on the long-awaited new 4-inch iPhone SE. Apple also trotted out new software for iPhones and iPads (iOS 9.3), and new Apple Watch bands. The tech titan cut the starting price for its smartwatch to $299 from $349 as well. Apple investors were not excited by the no-surprise event. Shares flatlined, closing down 1 cent at 105.91 on the stock market today . But Apple sees a big opportunity with its new 9.7-inch display iPad Pro, joining the 12.9-inch model released last fall. Like its big brother, the smaller iPad Pro supports accessories like the Smart Keyboard and Apple Pencil. The addition of plug-in accessories like USB and SD card adapters make it even more of a PC replacement, Apple executives said. Apple began its media event Monday with a short video listing all of the company’s major products throughout its history. Apple will celebrate its 40th anniversary on April 1. So it’s fitting that Apple is taking on Microsoft, its chief rival from the early days of the PC, as it launched its latest iPad. Replace Your Windows Laptop Phil Schiller, Apple’s senior vice president of worldwide marketing, gave two reasons why Apple is coming out with a smaller iPad Pro. First, it will be a compelling upgrade to many people with older iPads, he said. To date, Apple has sold over 200 million iPads with a 9.7-inch display. That size device is optimal for portability and usability, he said. “There’s a second group of people we’d love to reach with this new iPad Pro: Windows users!,” Schiller said, prompting chuckles from attendees at the event. “The majority of people who come to an iPad Pro are coming from a Windows PC, a desktop or a notebook.” Many Windows PC users have not had a good reason to replace their old computers, he said. “There are over 600 million PCs in use today that are over five years old. This is really sad,” Schiller said. “These people could really benefit from an iPad Pro. And when they see the features, performance and capabilities of a product like the iPad Pro designed for our modern digital lifestyle, well, many of them will find it is their ultimate PC replacement.” Microsoft is going after the same notebook PC replacement market with its Surface tablet-notebook convertibles. Microsoft’s flagship Surface Pro 4 starts at $899, but has a 12.3-inch display and at least 128 GB of data storage. Microsoft stock rose 0.7% to 53.86. The new iPad Pro has a 64-bit A9X chip that rivals the performance of most portable PCs, Apple said. It also has a four-speaker audio system, a 12-megapixel rear-facing camera and a 5-megapixel FaceTime camera. It also boasts all-day battery life and support for the latest wireless cellular bands for fast connectivity. The iPad Pro starts at $599 for a 32-GB model. Pre-orders begin Thursday and it will go on sale March 31. The Smart Keyboard costs $149. “We believe that iPad is the perfect expression of the future of personal computing,” Apple CEO Tim Cook said. “We took a giant step in this direction last fall with the introduction of the 12.9-inch iPad Pro. And since then, many people are telling us that the iPad Pro has become their primary computing device.” After introducing the 9.7-inch iPad Pro, Cook said, “It’s time for you to replace that PC laptop.” ‘Aggressive’ iPhone SE Price Also going on sale March 31 is the iPhone SE. The new 4-inch smartphone will replace the two-year-old iPhone 5S. It includes upgraded components including an A9 processor, 12-megapixel camera and NFC technology to enable Apple Pay. The iPhone SE will start at $399 for a 16-gigabyte model. The biggest surprises at the Apple product event involved pricing, including the Apple Watch price cut and “very attractive starting price” for the iPhone SE, Drexel Hamilton analyst Brian White said in a report. The iPhone SE starting price is $50 less than the iPhone 5S it replaces, White said. “We believe this attractive price point for the iPhone SE could help Apple in developing countries, including the iPhone’s expansion in India and in Tier 3-5 cities (80-90% of China’s households) in China,” he wrote. S&P Global Market Intelligence analyst Angelo Zino called the pricing of the iPhone SE “aggressive” and said it could help the company better penetrate emerging markets and attract more Android smartphone users. Most analysts had expected a price of about $500 for the iPhone SE, FBR analyst Christopher Rolland said in a report. The iPhone SE “provides a more inexpensive migration choice for cost-conscious customers,” Rolland said.

Apple Supplier Broadcom, Tech Giant Cisco Pitted In Data Center War

Tech giant Cisco Systems ‘ ( CSCO ) 16-nanometer data center semiconductor could slug Apple ( AAPL ) supplier Broadcom ( AVGO ), which is ramping its 28-nm Tomahawk technology, an RBC analyst said Monday. Broadcom’s Tomahawk will go for $600-$700 per chip, replacing the outmoded Trident chip that costs less than $500, on average. Unlike Trident, however, Tomahawk won’t win across-the-board vs. Cisco, RBC’s Amit Daryanani wrote. Cisco recently unveiled its CloudScale application-specific integrated circuit (ASIC), in direct competition with data center chipmakers Broadcom, Cavium ( CAVM ), Intel ( INTC ), Marvell Technology Group ( MRVL ) and Mellanox Technologies ( MLNX ). In the past, Broadcom’s Trident won “across the board” at Cisco. This time, Cisco is likely to use its own CloudScale ASIC in its Nexus 9000, 9200 and 9300 platforms, leaving the 9500 to hold the Tomahawk silicon, Daryanani said. Other users include Hewlett-Packard Enterprise ( HPE ), Arista Networks ( ANET ) and Juniper Networks ( JNPR ), which had a two-year head start to begin ramping Tomahawk-based solution, Daryanani wrote. He sees a five- to six-year lifespan for the product. Still, “we believe Cisco encroachment into the merchant silicon market needs to be monitored by Broadcom investors,” he wrote. “For now, we continue to believe Broadcom’s solutions are the market-leaders for cloud/data center spenders.” Daryanani maintained his 180 price target and top performer rating on Broadcom stock. Shares rose a fraction Monday, to 152.89, on a day when Apple released new products that didn’t represent huge advances and were expected. Cisco stock fell a fraction on Wall Street Monday, while Apple was flat.

Are Apple, Facebook, Google Shopping For Payments Acquisitions?

Silicon Valley tech giants Apple ( AAPL ), Facebook ( FB ) and Alphabet ‘s ( GOOGL ) Google are likely to begin acquiring payments firms, with  PayPal ( PYPL ) among the possible targets, investment bank Wedbush said after polling what it termed a panel of experts. The shopping spree will be sparked by slowing industry growth and “capital markets back at higher valuations,” Wedbush analyst Gil Luria wrote in a research note Monday. The panel told Wedbush that Google would be the best fit to acquire PayPal. Luria, however, disagreed with the panel, writing that he believes MasterCard ( MA ) would gain more value from a PayPal acquisition. PayPal stock was up 4%, near 41, in late-afternoon trading on the stock market today . The IBD Leaderboard stock cleared a 40.03 buy point early Monday. The stock has an IBD Composite Rating of 94, where 99 is the highest. Wedbush panelists included a former senior vice president at PayPal, as well as executives with credit card companies including MasterCard. On Sunday, PayPal announced that it would be opening up its money-transfer service Xoom to Cuba. The announcement coincided with President Obama’s historic trip to the island nation. Square Not Likely To Be Acquired The report dismissed Square ( SQ ) as a potential acquisition target until it can attract more than just “small-ticket merchants,” Luria cited the panelists as saying. Luria speculated that Visa ( V ) would unload its approximately 1% stake in Square vs. acquiring more. Earlier this month, Square posted its first quarterly earnings reports since its November IPO. Results met Wall Street expectations, but slowing merchant growth led to a disappointing outlook . Square stock rose to a 2016 high on Monday, up 10% near 13, in late-afternoon trading. The gains came with no apparent news. In an email, Luria told IBD, “Square is very heavily shorted with a very small float — that has translated into significant volatility in the share price, including today.” The float will rise in less than two months: The IPO lockup period for insiders and major venture capital investors expires May 17. The panelists said that if Square’s lending business continues to grow at 200% to 300%, it will likely “end badly.” Square Capital provides cash advances to some of Square’s small-merchant customers. But Square Capital is essentially a subprime lender, Luria has told IBD.