Apple 2.0

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Apple's 3 million iPad weekend: What the analysts are saying

November 5, 2012: 11:18 AM ET

Despite stock outs, sales of the Wi-Fi only model exceeded most of their expectations

FORTUNE -- The actual number of iPad minis (as opposed to iPad 4s) sold over the past three days is still unclear. Piper Jaffray's Gene Munster put it at 2 to 2.5 million, despite the fact that 9 out of 10 customers his firm polled last Friday were buying the mini, and not the full-sized iPad 4.

But most analysts saw the 3 million (new) iPad sales figure that Apple (AAPL) released Monday as what the Street calls a "positive print," and the market reacted accordingly -- at least in early trading.

A sample of the analysts' notes that crossed our desk:

J.P. Morgan's Mark Moskowitz: iPad Mini and 4th-Gen iPad Set a New Launch Weekend Record. "We expect shares of Overweight-rated Apple to react favorably in the near term. This morning, the company announced that 3M iPads were sold in the first three days since the launch of the iPad min and 4th-gen iPad. This number is significant, as it doubles the first weekend launch of the 3rd-gen iPad of 1.5M units (Wi-Fi only) in March 2012. We expect the product momentum to continue as the Wi-Fi + Cellular versions of both the iPad mini and 4th-gen iPad begin shipping in a few weeks in the U.S. and in many more countries later this year. In our view, this level of early adoption of the new iPad mini could restore significant upside potential down the road, as the product expands Apple's tablet market coverage." Maintains $770 price target.

BTIG's Walter Piecyk: Apple's Limited Supply in a Compressed Product Cycle. "Even if we assumed minimal sales of 4th generation iPads (which should raise its own red flags), the number of iPad mini's sold was less than the number of iPad 3′s sold during the launch weekend, and that is not a positive whether you blame supply or demand... Finally, we cannot ignore the reality that the iPad mini took 3 days to sell out of its pre-orders while the iPad 3 sold more units in just 17 hours. This is surprising given the attractive price points of the iPad mini and the fact that is was launched in 3x the number of markets. It's hard to ignore this as a data point on the popularity of Apple's new product launches but clearly it can be overcome as we approach the holiday selling season."

Merrill Lynch's Scott Craig. LTE iPad model launch is more important than people think. "The first wave of the iPad 4 & mini launch included WiFi models only, and we believe that the upcoming launch of LTE-based iPad 4 & mini models (in two weeks, beginning with the US) should serve as an important catalyst for the new product cycle. Note that iPad models with 3G/LTE connectivity represent ~45% of total iPad units and ~50% of total iPad revenue, which are not captured in the 3mn unit figure released today." Maintains $840 price objective.

Janney's Bill Choi: Good iPad Demand; Margin Impacts Reflected. "Ultimately, we believe inherent GM of iPad is healthy at over 30%, and that current margins should improve with higher volume, and that Apple's software ecosystem remains differentiated and able to sustain a competitive price premium." Fair value estimate: $745.

Topeka's Brian White: "Mini Mania" Drives Strong New iPad Weekend with 3 Million Sold. "We expected the iPad mini to experience the strongest demand this weekend and we had projected 800,000 to 1 million units; thus we believe the iPad mini surpassed our expectations... Our checks across the country this weekend indicate that the iPad mini sold out completely at nearly 60% of the U.S. Apple stores we surveyed and those stores with stock had mostly 64GB." Maintains Street-high $1,111 price target. 

Wells Fargo's Maynard Um: Great Start Highlighting What Should Be A Strong Holiday. "Our channel checks leading up to last Friday's launch highlighted significant buzz and momentum surrounding the iPad Mini and fourth-generation iPad (though customers and sales reps favor the Mini) and we saw lines at many retailers throughout the weekend." Maintains valuation range of $710 to $730.

Barclay's Ben Reitzes: Apple's iPad Launches See Strong Demand in First Weekend Despite Limited Supply. "We believe Apple's tone from the release also suggests limited availability for new models. Similar to the iPhone 5 launch in September, we believe Apple is facing significant constraints. We believe the release is a positive surprise considering Apple was able to deliver a number that materially exceeded the regular iPad." Maintains $800 price target.

Piper Jaffray's Gene Munster: iPad mini launch sales almost double expectations. "We believe 2-2.5m of the 3m iPads sold this past weekend were iPad Minis. The basis for our estimate is that in our line surveys, roughly nine out of every ten customers was waiting to purchase an iPad Mini rather than a full-sized iPad... While we observed lines for the iPad Mini/4th Gen iPad launch 20-50% shorter than the 3rd Gen iPad, overall units were significantly better at 3 million compared to 1.5 million Wi-Fi only 3rd Gen iPads in March. We believe that online sales helped make up the difference we saw in lines as well as the iPad Mini/4th Gen iPad launch taking place in 34 countries compared to 10 for the 3rd Gen iPad." Maintains $900 price target. 

Jeffries' Peter Misek: Strong Initial Weekend iPad Sales. "Our expectations were for 2M total iPads. Sales did not include cellular (LTE) versions of the new iPad models as they have not yet been shipped. We expect sales will continue to be strong in CQ4 with the addition of the LTE models, launches in new countries (including China), and holiday demand." Maintains $900 price target. 

BMO's Keith Bachman: iPad support: "Sales of 3 million units of the iPad mini and 4th-generation iPad, compares with 3 million units of 3rd-generation iPad sales in March 2012, including 1.5 million of the Wi-Fi model. Apple is currently shipping only the Wi-Fi models, while the cellular models will be available in a few weeks." Maintains $730 price target. 

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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