UBS dissects 4GB iPod nano, raises Apple price target

Posted:
in iPod + iTunes + AppleTV edited January 2014
UBS Investment Research on Monday updated its price target on Apple shares after tearing apart and analyzing the company's new 4GB iPod nano digital music player.



The firm's analysis found the material cost on the player to be approximately 65% of its sales price, which appears to support an overall profit to Apple of at least 20% per nano.



In total, UBS estimates Apple's material cost of the $249 player to be $164.10 before accounting for costs associated with labor, warranty, phone support, logistics, procurement, depreciation, other operational overhead and fees.



"We estimate that flash NAND currently represents about 70% of the total material cost to produce the (4GB) iPod nano or about $115," analyst Ben Reitzes wrote in a research note to clients. "Other noteworthy component costs include: 1.5? color LCD screen at about $8.00 or 5% of the total cost, battery at about $6 or 4% of the total cost and PortalPlayer chip at about $7 or 4% of the total cost."



In its breakdown of the bill of materials, UBS assumed Apple's cost of 2GB of flash NAND to be $57, slightly above the $54 per 2GB cost quoted by market research firm iSuppli in its recent dissection of the 2GB nano.



Based on checks with retailers, UBS says 4GB iPod nano sales are off to a strong start, while the 2GB version seems less popular. The firm also notes that wait times for 4GB nanos have stretched to 1-2 weeks from 5-7 days a week ago on the Apple online store.



As a result of its analysis, UBS raised its price target on Apple from $59 o $64. The firm continues to rate the stock as a "Buy."

Comments

  • Reply 1 of 18
    brussellbrussell Posts: 9,812member
    Just about every time Apple releases a new product, some bozo comes along and says they aren't making a profit from it. All of Apples products have nice profit margins. It's just the way Apple does business.
  • Reply 2 of 18
    Supplies of 4GB models will equalize just-in-time for the holiday shopping season. Good timing Apple.
  • Reply 3 of 18
    melgrossmelgross Posts: 31,890member
    I'm expecting things to continue to move up for a while. I passed on other investment opportunities because of it. I've also seen other friends invest in Apple recently, so I hope it does well for them as well.
  • Reply 4 of 18
    Well, unless Apple addresses the scratch-prone screen issue - it could be the bomb of the year when people start hearing about it. This is a serious defect that needs to be corrected ASAP.



    There is no reason a $250 product should have a seriously marred screen after keeping it a couple hours in an otherwise empty shirt pocket.
  • Reply 5 of 18
    Quote:

    Originally posted by umijin

    Well, unless Apple addresses the scratch-prone screen issue - it could be the bomb of the year when people start hearing about it. This is a serious defect that needs to be corrected ASAP.



    There is no reason a $250 product should have a seriously marred screen after keeping it a couple hours in an otherwise empty shirt pocket.




    The "screen scratch issue" is a farce, really. Firstly, the 'screen' doesn't so much scratch as the 'whole' device does. Saying it's the screen that scratches is putting a bit of a spin on things. It makes it sound as if the 'screen' goes bad. Not the case. I've seen Nanos in Apple stores that were on that hard wooden table for days, with, literally, thousands of people clammering to touch and use it, whose screens were still clear and easy to see. Ofcourse, the body had hair-line scratches, but nothing like what's being suggested. All spin, really.



    Noone's bothered to explain what it is that "scratch-prone screen" really means. All iPods scratch. Have you never seen people with their Motorola V3 with the plastic still on? I have. People hate their beautiful electronic goods being scratched. People never used to carry their GameBoy Micros around in cases. Now it's defacto for you to have a case for your PSP. Why? You know why? They're nice and shiny that's why. But still they sell - no complaints there!



    It is obvious, though, that people will complain about such things - and the traditional Apple baters are unto this like kids to candy. Nothing new there. For every complaint on a website that talks about scratches there are 10000 people happy with their purchase - scratches and all. Just like my sisters school friend, who doesn't give a damn, really. She just flings it about, acquiring new scratches as she goes!
  • Reply 6 of 18
    melgrossmelgross Posts: 31,890member
    Quote:

    Originally posted by mavrik89

    The "screen scratch issue" is a farce, really. Firstly, the 'screen' doesn't so much scratch as the 'whole' device does. Saying it's the screen that scratches is putting a bit of a spin on things. It makes it sound as if the 'screen' goes bad. Not the case. I've seen Nanos in Apple stores that were on that hard wooden table for days, with, literally, thousands of people clammering to touch and use it, whose screens were still clear and easy to see. Ofcourse, the body had hair-line scratches, but nothing like what's being suggested. All spin, really.



    Noone's bothered to explain what it is that "scratch-prone screen" really means. All iPods scratch. Have you never seen people with their Motorola V3 with the plastic still on? I have. People hate their beautiful electronic goods being scratched. People never used to carry their GameBoy Micros around in cases. Now it's defacto for you to have a case for your PSP. Why? You know why? They're nice and shiny that's why. But still they sell - no complaints there!



    It is obvious, though, that people will complain about such things - and the traditional Apple baters are unto this like kids to candy. Nothing new there. For every complaint on a website that talks about scratches there are 10000 people happy with their purchase - scratches and all. Just like my sisters school friend, who doesn't give a damn, really. She just flings it about, acquiring new scratches as she goes!




    a lot of that's true, but it's getting bad press and that's important too.



    http://www.eweek.com/article2/0,1895,1863426,00.asp



    That's just one.
  • Reply 7 of 18
    lupalupa Posts: 202member
    The thing is, iPods have always scratched, and there has already been a lot of crap about it but such coverage just seems to make the case market all the more profitable. Unless there is an actual component failure that arises from the nano or something else more substantial than scratches, I don't think the press can break the nano's momentum (or brand appeal) to the general public.
  • Reply 8 of 18
    ever seen the remote controls in an Asian family?



    saran wrap your nanos! yah!
  • Reply 9 of 18
    Quote:

    Originally posted by mavrik89

    The "screen scratch issue" is a farce, really. Firstly, the 'screen' doesn't so much scratch as the 'whole' device does. Saying it's the screen that scratches is putting a bit of a spin on things. It makes it sound as if the 'screen' goes bad. Not the case. I've seen Nanos in Apple stores that were on that hard wooden table for days, with, literally, thousands of people clammering to touch and use it, whose screens were still clear and easy to see. Ofcourse, the body had hair-line scratches, but nothing like what's being suggested. All spin, really.





    Sorry, but it is your post that is farcical. You really don't get it. You don't OWN a nano - only seen the models or versions at the Apple store. It's not spin.



    I have a 20Gb iPod, I know about small scratches that can appear on an iPod that you have to live with. None of those scratches appeared after 2 hours in my pocket. None of those scratches so badly marred the screen area that the image was blurred.



    My nano's screen finish was marred after TWO HOURS in a shirt pocket with nothing to scratch it except the cotton fabric. This is beyond the norm. It's a defect. Maybe the models in Apple stores you saw were a different manufacture build, or maybe they altered the display models somehow - I don't know. But my nano, and the nano of hundreds of other buyers (at least) has a coating which scratches more easily than anything Apple has ever sold with the iPod name. And this is not acceptable.



    Get it?
  • Reply 10 of 18
    melgrossmelgross Posts: 31,890member
    I don't remember from when I saw them because I didn't look too hard, but the scratching mostly affects the black models (other than the screen) right?



    If the front is plastic then it would seem as though the black ones have a thin black paint applied. That seems odd. What reason would the factory have to do that when a black colored-through plastic could have been used instead?



    A friend has a white one and hasn't had any problems with the screen scratching so far.
  • Reply 11 of 18
    Quote:

    Originally posted by melgross

    I don't remember from when I saw them because I didn't look too hard, but the scratching mostly affects the black models (other than the screen) right?



    If the front is plastic then it would seem as though the black ones have a thin black paint applied. That seems odd. What reason would the factory have to do that when a black colored-through plastic could have been used instead?



    A friend has a white one and hasn't had any problems with the screen scratching so far.




    Nope, affects white models - I have a white one. There is a transparent layer above the white (I don't know about black models) - you can see it from the side. It's about 2-3mm thick and covers the entire face of the nano, including the screen. This transparent layer (or its coating) is what is getting scratched or smudged or marred so easily. And when these (so far) permanent marks happen above the screen - you can't view the screen very well. This didn't happen with older iPod versions, at least not so readily.
  • Reply 12 of 18
    melgrossmelgross Posts: 31,890member
    Quote:

    Originally posted by umijin

    Nope, affects white models - I have a white one. There is a transparent layer above the white (I don't know about black models) - you can see it from the side. It's about 2-3mm thick and covers the entire face of the nano, including the screen. This transparent layer (or its coating) is what is getting scratched or smudged or marred so easily. And when these (so far) permanent marks happen above the screen - you can't view the screen very well. This didn't happen with older iPod versions, at least not so readily.



    If that's what it is then I understand how the white ones are looking.



    This is clear polycarbonate. There is a method of painting this for model racecars that are actually used in races. These cars get damages constantly. The paint is Xylene based. The Xylene is one of the very few solvents that will dissolve polycarbonate without causing cracking.



    The way it's done is to spray the back of the plastic. In other words, the inside. The paint bonds to the plastic for a permanent finish.This leaves the outside clear and polished. It also gives it depth.



    When the surface gets scratched, it can be polished back again using any number of polishes for plastic. As the screen is behind this same surface, it too can be polished.



    The scratches on the black models must just appear more obvious against the black.



    Most likely the reason why this seems so bad is because it's smaller and the scratches seem worse. Also, as it's smaller, it sits further down in a pocket. If anything at all is in there, it will be down at the bottom as well.



    I agree with Apple. This is why there are hundreds of case styles available. Something made out of polished plastic is bound to get scratched.
  • Reply 13 of 18
    Hundreds of nano cases? Where? You can't even find one, except Apple's and it's not very good.



    The nano got scratched on my empty pocket. You think this is normal?



    Yeah.



    Right.
  • Reply 14 of 18
    melgrossmelgross Posts: 31,890member
    Quote:

    Originally posted by umijin

    Hundreds of nano cases? Where? You can't even find one, except Apple's and it's not very good.



    The nano got scratched on my empty pocket. You think this is normal?



    Yeah.



    Right.




    Obviously, though not to you, I'm talking about iPod cases in general. There are only about 2 dozen models out for the Nano so far.



    This is one long time case maker. It's true that theirs aren't out yet, but others are. I just thought you would like to see them as their cases have proven popular.



    http://www.speckproducts.com/mktg/August2005/nano.htm
  • Reply 15 of 18
    Quote:

    Originally posted by melgross

    Obviously, though not to you, I'm talking about iPod cases in general. There are only about 2 dozen models out for the Nano so far.



    This is one long time case maker. It's true that theirs aren't out yet, but others are. I just thought you would like to see them as their cases have proven popular.



    http://www.speckproducts.com/mktg/August2005/nano.htm




    Yeah, I know there are many in the works or soon to be released. I should have added that caveat. But they aren't in the stores here Japan as yet (or they've sold out?). Heck, Apple hasn't even shipped my nano lanyard headphones as yet! The Speck models look to be among the better ones.



    I had to improvise for the time being, and even found a static/pressure cover that has fit over the screen that is marketed for DigiCamera LCDs. It improves the appearance a bit. And I use a soft mouse bag to keep my nano in.



    But - this doesn't address the issue of WHY the nano scratches more easily than any other iPod. And it may not be all nanos - perhaps those from certain lots. I don't think hundreds of people would consistently exaggerage this issue.
  • Reply 16 of 18
    melgrossmelgross Posts: 31,890member
    Quote:

    Originally posted by umijin

    Yeah, I know there are many in the works or soon to be released. I should have added that caveat. But they aren't in the stores here Japan as yet (or they've sold out?). Heck, Apple hasn't even shipped my nano lanyard headphones as yet! The Speck models look to be among the better ones.



    I had to improvise for the time being, and even found a static/pressure cover that has fit over the screen that is marketed for DigiCamera LCDs. It improves the appearance a bit. And I use a soft mouse bag to keep my nano in.



    But - this doesn't address the issue of WHY the nano scratches more easily than any other iPod. And it may not be all nanos - perhaps those from certain lots. I don't think hundreds of people would consistently exaggerage this issue.




    I have a lot of experience with plastics. Polycarbonate has many advantages. Acrylic would crack and craze when dropped. Even butlyene cracks when whacked. Acrylic is harder than Polycarbonate - less scratches. Butlyene doesn't look very good. It and similar plastics are used for many cases, but it isn't transparent or translucent, and can't be polished. It looks cheap. It also feels cheap.



    Polycarbonate is what is used for glasses. You have to clean it with a cloth meant for lenses. Same thing with cleaning agents. Never a solvent. It will crack from plasticizer draw.



    I don't believe that it does scratch more. It's smaller and the scratches just seem larger. People are also treating them differently because of their size even though they don't think so.



    There is a very good reason why so many cases are sold.
  • Reply 17 of 18
    cosmonutcosmonut Posts: 4,872member
    As long as there are rivets built into many styles of jeans -- especially around the little pocket -- nanos are going to be scratched. I don't see how any plastic could withstand the abuse from a poorly placed rivet.
  • Reply 18 of 18
    melgrossmelgross Posts: 31,890member
    Quote:

    Originally posted by CosmoNut

    As long as there are rivets built into many styles of jeans -- especially around the little pocket -- nanos are going to be scratched. I don't see how any plastic could withstand the abuse from a poorly placed rivet.



    Good point.
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