AAPL hits $600, iPad (3) hits 3 Million, iPad (3) costs…

So some number topics to discuss.

First, AAPL just hit 600 today fresh off the announcement of a dividend and a repurchase of stock program. The stock shows no signs of slowing down and now that Apple has provided some answers on dispensing of their cash that issue is also resolved. The dividend also opens up AAPL to a whole new class of investor further increasing the interest in AAPL. Dec 31st 2011 AAPL was at 405, now it just went over 600. To quote Tim Cook “the pipeline is full”, new laptops are coming (Retina Screen MacBook Pros?), the new iPhone (5), and perhaps the iTV product.

Apple in their press release stated that they have sold 3 million iPads over the weekend. That number probably represents sales at all retail locations sales and pre-orders delivered on Thursday/Friday/Saturday. In terms of comparison, Apple was projected by analysts to have sold 1 million iPad 2 last year. Apple’s supply and manufacturing teams were ready for this launch with the kind of inventory numbers that were not available last year. In addition, Apple’s launching in more countries faster than ever with their best equipped/most standards compliant 3g/4g/LTE device ever. Apple was only able to sell slightly over 4 million iPads last year in their product version transition quarter. If Tim Cook has the supply chain able to ramp up quickly to provide significant inventory, it bodes well for Apple’s numbers all year long with a calendar full of potential new launches.

A couple of small notes. One, at the two Apple Stores I visited the stores had inventory save for 64GB LTE versions, or Apple’s highest margin product. Two, 4G LTE versions seems to be far more popular than their previous 3G counterparts. Still, not as popular as the WiFi only version but it looks like the percentage is narrowing and there’s significant margin/revenue there for Apple as well as making Apple very popular with Verizon and AT&T. Also, the rumors sourced from repair facilities receiving spare parts of the new iPad were all on target. When all the hype starts around the iPhone 5, this will be MoD’s benchmark for tracking this rumor. Also, as we have speculated before the supply chain for the iPhone may be so massive that Apple will really has no chance of unveiling a legit surprise. And it doesn’t need to, it’s far more important that Apple has 20 to 30 million iPhone 5s ready in the pipeline at launch.

So how did Apple add a Retina display, better camera, bigger battery, and better processor. iSuppli has done their usual thorough job at estimating the cost of the device and estimates that Apple is going to take a margin hit on the new device since it will cost 30% more than the iPad 2. The older iPad 2 WiFi according to their projections cost $245 while the new iPad 16 GB WiFi is $316. While it’s understandable that the new screen is going to cost Apple more, you have to wonder if iSuppli can accurately project what Apple is paying for solid state storage or what Apple is paying for the 5 MP camera parts (same camera part as the now 2 year old iPhone 4). And if the Retina display and LTE lead to a higher mix of 32 GB + models with LTE, then Apple can easily offset the costs with the higher margin versions.

Now, if we take the iSuppli data at face value, it presents a bigger problem for Apple’s competitors. Apple has better component buying power than any competitor save for Samsung, so hitting a lower price point on a similar equipped retina screen iPad is going to be difficult. But let’s say that for arguments sake a competitor can match Apple’s price point, same hardware overall specs. In order to have a significantly cheaper product than Apple, the competitor would probably need a $399 price point matching the iPad 2 price with higher specs to really dent Apple on price. Factoring in retail markup of about 10%, a manufacturer is going to have to survive on about 40 bucks or 10% margin on the product. Again, no one has been able to match Apple’s pricing on components to date (last year’s XOOM was more expensive than the iPad2 according to iSuppli), and the new display requirements may only increase that gap.

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