updated 03:55 pm EDT, Tue May 25, 2010
Current levels a million less, says analyst
Apple is currently producing about 1 to 1.5 million iPads per month, with the potential to make far more, says Sterne Agee's Vijay Rakesh. The information is said to come from checks with the company's supply chain, which hint that by some point in the September quarter, Apple could escalate production to approximately 2.5 million units a month. Earlier manufacturing problems that have caused wide supply shortages have been fixed, says Rakesh, though memory is believed to be a "constraint."
Checks are also said to indicate that production of the next iPhone is "barely starting," consistent with expectations of a June 7th announcement. At the same time, the company may be unlikely to have the phone ready to ship simultaneously with its introduction, as one media report has proposed. By the 7th, the company will have had less than a month's worth of product on the assembly line.
Another analyst, Andy Hargreaves of Pacific Crest, meanwhile argues that Apple may be approaching a critical decision point for its cash balance. The company saves an unusually large amount of its profit, and currently has over $41.7 billion in reserve. This could potentially hit $56.3 billion in 12 months, and $64.3 billion or more by the end of FY2011.
Leaving this money to sit is a drag on return for both equity and invested capital, notes Hargreaves, who adds that it makes Apple stock look overvalued. A stock buyback or dividend is therefore thought be "very likely" before the end of FY11. If Apple does a $30 billion buyback, it could raise that period's EPS growth from 21 to 38 percent.