THE APPLE INVESTOR: Here Is What The iPad 2 Stellar Sales This Weekend Mean To Shareholders

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steve jobs, ipad 2, black white, , march 2011

Photo: AP

AAPL Up In Down Market
Stocks are suffering today over concerns for the escalating financial impact of Japan’s earthquake and tsunami. The Bank of Japan poured a record $183 billion into the money markets to ease those worries, but explosions at Reactor #3 at the Fukushima Nuclear Plant on Monday afternoon (local time) indicate the scale of the devastation is yet to be determined. The tech sector is in the negative, as shares of GE tanked. The company designed all six reactors at Fukushima. Shares of Apple are up on news of stellar sales of the iPad 2 this weekend. Upcoming catalysts for the stock include news regarding Steve Jobs‘ healthy return; iPad 2 sales updates; monthly NPD data to gauge Mac / iPod businesses; iPhone sales updates on new carrier Verizon, the push in China, as well as the launch of the iPhone 5 anticipated this summer; new revenue streams such as video, books / publishing and social (Ping); moving iTunes into the cloud; and the continued evolution and adoption of Apple TV. Shares of Apple trade at 14x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).iPad Extending Its Lead Over Competitors (Fortune)
Gene Munster’s team at Piper Jaffray walked the iPad 2 lines in New York City and Minneapolis and interviewed 236 would-be buyers. Results:

  • Munster is sticking with his estimate of 400,000 to 500,000 iPad 2s sold, compared to the 300,000 original iPad sold in its first weekend last year.
  • The difference is that nearly all those iPad 2s were sold in one day; stocks were essentially depleted by Saturday and not replenished. In its calls to retailers over the weekend, his team was unable to find a single iPad 2.
  • 70% of iPad 2 buyers were new to the iPad, compared with 23% of iPhone 4 buyers who were new to the iPhone at launch.
  • 47% of buyers were purchasing a 3G model, which carries a $130 premium.

Munster believes the study this shows Apple is expanding its base of iPad users, which is critical to maintaining its early lead in the growing tablet market. Coming from SXSW this weekend where the line for the Apple pop-up store was continually around the block, I don’t doubt it.

Apple Sold Between 500K… (Bloomberg)
Brian Marshall from Gleacher & Co predicts that the iPad 2 will sell between 500-600K units, close to double the original iPad units. Apple also released the iPad 2 for purchase on its online store which is now already backlogged for 3-4 weeks. He believes his 2011 estimate of 30 million units is conservative though it is more than double Apple’s sales in 2010. 

…And 1 Million Units This Weekend (Reuters)
Wedbush Securities’ Scott Sutherland says Apple sold close to 1 million iPad 2s on opening weekend. Basically the only thing limiting how many Apple sells is how much it can put on shelves. In an online poll of Business Insider readers, three-fourths believe Apple will sell over 600K. Read more at Business Insider.

The 32GB iPad 2 3G Costs Between $270… (The Wall Street Journal)
UBM TechInsights research firm estimates the 32GB iPad 2 3G costs $270 to make based on components. That’s substantially more than the firm’s estimate for the first iPad but lower than Motorola Xoom (which retails for more). The dual-processor A5 chip cost Apple about $25, up from a range of $15 to $20 in its original estimate and about $10 more than comparable chips on the market. But that increase was countered by use of the same components for some functions as the Verizon iPhone 4 and the original iPad, which likely allows Apple to get lower prices because of its purchasing volume.

… And ~$325 To Make (All Things Digital)
iSuppli has its own bill-of-materials estimate for the 32-gigabyte, 3G version of the new iPad 2 which sells for $729. There are two estimates, AT&T version at $326.60 and Verizon version at $323.35. Some of the wireless chips used in the AT&T version are a little more expensive or require an extra part. The most expensive component by far is the touch-sensitive display, coming at $127. These estimates are considerably more than the estimate from UBM Techinsights. Read more as to why this matters at Business Insider.

White iPhone To Finally Launch (VentureBeat)
Phil Schiller, senior vice president of worldwide product marketing at Apple, tweeted that “The white iPhone will be available this spring (and it is a beauty!).” Apple might very well sell a lot of these, considering the mystery around the elusive device. The white iPhone never shipped, supposedly because the white back of the iPhone 4 reflected so much light from the LED flash that pictures were overexposed. Available this spring leads me to believe that it will be the iPhone 4, but with the iPhone 5 coming out in June, not sure what the point would be in buying the white one.

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