BOM for Apple's (AAPL) New iPad Shows Increase in Overall Costs
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Price: $166.90 +0.64%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
Revenue Growth %: -4.3%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
Revenue Growth %: -4.3%
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Apple (Nasdaq: AAPL) shares are ripping Monday morning following the late-Sunday announcement that a conference call will be held later this morning to discuss the company's $100 billion cash pile. But should CEO Tim Cook, et al, curb the enthusiasm as the Apple cash machine might be spitting out less dough soon?
Last Friday, IHS's (NYSE: IHS) iSuppli issued a Bill of Materials (BOM) for Apple's new iPad. According to the firm, the "new iPad, equipped with 32 Gigabytes (GB) of NAND flash memory and 4G Long Term Evolution (LTE) wireless capability, carries a bill of materials of $364.35. When the $10.75 manufacturing costs are added in, the cost to produce the new iPad rises to $375.10. The BOM of the 16GB 4G LTE version amounts to $347.55, and the 64GB version is estimated at $397.95."
The $364.35 BOM represents 50 percent of the $729.00 retail price of the 32GB LTE version of the new iPad. The newest device is more expensive to produce than the iPad 2 at the time of product launch, even though the retail price points are the same. The 32GB LTE model’s BOM is nearly 9 percent higher than an iPad 2 equipped with 32GB and 3G wireless, which carried a cost of approximately $335 at the time of product launch. Major factors driving up the BOM include the addition of the high-resolution Retina display, LTE wireless and a larger-capacity battery.
For a comparison, here's what iSuppli had for the iPad 2 Bill of Materials (BOM) compared to the original iPad: "The 32GB [iPad 2] equipped with the code division multiple access (CDMA) air standard carries a BOM of $323.25. The compares with $320 for the first-generation 32GB 3G iPad, based on pricing from April 2010." That's a 1 percent increase in overall costs.
With Apple shares up 50 percent since the start of 2012, investors should keep their eyes on how the iPad affects margins for the current quarter.
Investors are already wondering whether the higher costs on materials and production will carry over to Apple's next-generation iPhone -- which sells multiples more than the iPad -- causing Apple to hike prices to carriers, and carriers finally making the move to cut subsidies. The idea was mulled last week and could have a substantial impact on Apple's numbers moving forward.
Over the last six quarters, Apple has beat expectations by an average of 22 percent, with earnings growth rate of 116 percent and revenue growth rate of 73 percent.
Last Friday, IHS's (NYSE: IHS) iSuppli issued a Bill of Materials (BOM) for Apple's new iPad. According to the firm, the "new iPad, equipped with 32 Gigabytes (GB) of NAND flash memory and 4G Long Term Evolution (LTE) wireless capability, carries a bill of materials of $364.35. When the $10.75 manufacturing costs are added in, the cost to produce the new iPad rises to $375.10. The BOM of the 16GB 4G LTE version amounts to $347.55, and the 64GB version is estimated at $397.95."
The $364.35 BOM represents 50 percent of the $729.00 retail price of the 32GB LTE version of the new iPad. The newest device is more expensive to produce than the iPad 2 at the time of product launch, even though the retail price points are the same. The 32GB LTE model’s BOM is nearly 9 percent higher than an iPad 2 equipped with 32GB and 3G wireless, which carried a cost of approximately $335 at the time of product launch. Major factors driving up the BOM include the addition of the high-resolution Retina display, LTE wireless and a larger-capacity battery.
For a comparison, here's what iSuppli had for the iPad 2 Bill of Materials (BOM) compared to the original iPad: "The 32GB [iPad 2] equipped with the code division multiple access (CDMA) air standard carries a BOM of $323.25. The compares with $320 for the first-generation 32GB 3G iPad, based on pricing from April 2010." That's a 1 percent increase in overall costs.
With Apple shares up 50 percent since the start of 2012, investors should keep their eyes on how the iPad affects margins for the current quarter.
Investors are already wondering whether the higher costs on materials and production will carry over to Apple's next-generation iPhone -- which sells multiples more than the iPad -- causing Apple to hike prices to carriers, and carriers finally making the move to cut subsidies. The idea was mulled last week and could have a substantial impact on Apple's numbers moving forward.
Over the last six quarters, Apple has beat expectations by an average of 22 percent, with earnings growth rate of 116 percent and revenue growth rate of 73 percent.
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