iSuppli Breaks Down Price to Make iPad

Market research firm iSuppi came out yesterday breaking down the cost to build Recommended List selection Apple’s (AAPL, $198.67, 3.55) new iPad.

The cost to buy the cheapest version of the device –- the 16GB without 3G -– was $229.35. Apple is selling that model for $499. The highest-priced model retailing for $829, which includes 3G and has 64GB of memory, costs $364.15 to make.

The most profitable model for Apple is the 32GB model with 3G capabilities. The version retails for $729, but only costs $287.15 to produce. iSuppli said this indicates that Apple likely believes the 32GB models are its highest volume opportunity.

BMR Take: While the price of the iPad was substantially lower than many analysts had originally predicted, the company still has a lot of wiggle room to lower prices if early adoption is not strong. By the time iPad version 2.0 comes out, we’re sure consumers will see a better product at a better price, just like with the iPhone and iPod.

All in all, though, we currently view the iPad as a potential added bonus, but it is not core to our overall Apple thesis. If investors take out Apple’s $24.8 billion, or around $27.53 a share, in cash and short-term marketable securities, and $15.0 billion, or around $16.68 a share, in long-term marketable securities, the stock is very inexpensive for a comapny with Apple’s growth. We rate Apple a “Buy” with a $270 price Target.

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Tags: AAPL