J.P.Morgan North America Equity Research 03 Apra 2012 • Apple Inc. Those Are Some Big Numbers; Lifting Dec-12 Price Target to $715 For OW-rated Apple, we are raising estimates and our Dec-I2 price target to $715, vs. $625 previously. The key drivers of our estimate changes are better than expected unit sales activity of the iPhone and iPad. The purpose of our report is to highlight the incremental changes in unit growth trajectories versus ow prior expectations. Looking ahead, there are plenty of potential near to mid-term catalysts, including I) MacBook refresh, 2) iPhone refresh, and 3) increasing penetration of Asia-Pacific. Longer term, we think that the eventual introduction of Microsoft Office for the iPad should open the door for Apple to the enterprise PC segment. • Taking numbers higher. We are making significant increases to our operating estimates. Our research indicates that the iPhone and iPad shipment activity in the supply chain implies major upside potential to ow previous estimates. We are not trying to inflate expectations ahead of the Mar-Q print. Our intent is to communicate the incremental delta in our new and old estimates as identified by our recent research. The magnitude of the revisions, if accurate, stands to drive increased investor sponsorship of the stock in the near to mid term, in our view. Big iPhone unit revisions. Our research indicates that Mar-Q iPhone unit shipments tracked closer to 30-32 million. Our new estimate is 31.1 million, versus 28.1 million previously. We think that investors are expecting 29-31 million units. The flow-through effects of our revisions lift our new C2012 iPhone units estimate to 138.2 million, versus 128.7 million previously. Big iPad unit revisions. Our research indicates that Mar-Q iPad unit shipments tracked closer to 13-14 million. Ow new estimate is 13.8 million, versus 10.1 million previously. We think that investors are expecting 11-12 million units. The flow-throug