Apple Inc. (AAPL) has decided to postpone the launch of its iPad in international markets to the end of May 2010 (initially expected to be launched by the end of April). The company cited strong U.S. demand, which exceeded supply, as the reason for the postponement. The company is expected to announce international pricing and begin taking online pre-orders on May 10.

International markets have become an important driver of growth for AAPL as it has increased its presence in international markets via iPhones and iPods. International sales accounted for 58% of total revenue in the first quarter of 2010 (most recent quarter) compared to 46% of total revenue in the first quarter of 2009.

Apple’s shares are now trading at an all-time high, as investors are more focused on the rising demand for the iPad, accepting the near-term delay in shipments.

According to sources, Vodafone (VOD) will be the carrier for iPad in Australia, Germany, Italy, Spain and the UK. Telefonica’s (TEF) O2 will offer the iPad in the UK only while France Telecom’s (FTE) Orange will offer the iPad in France, UK, Spain and Switzerland. All the three carriers will offer their pricing plans by the end of May.

We believe that the international rollout will help it grow higher revenues in 2010 and higher margins from additional sales.
 
The iPad is available only in the U.S. for now and is priced at just $499 for the 16GB model, going up to $599 for the 32GB model and $699 for 64GB (only for the Wi-Fi model). The 3G version of the same device will sell for $629 and will not include monthly fees to AT&T (T) for wireless service.
 
Recently, market research firm iSuppli estimated that the raw materials used for the 16 GB WiFi iPad will cost $260, compared to its earlier estimate of $230. This implies that overall gross margins for the iPad may be lower than previously expected.

Further, the 64GB iPad 3G for $829 is quite expensive, so there may be pressure on the company to lower the price, which would lead to margin erosion.

Apple said that it has already sold more than 500,000 iPads in the U.S. during the first week of the April 3 launch due to huge demand, which exceeded supply. The company said that it has already taken a large number of pre-orders for iPad 3G models which are expected to go on sale by the end of April. Analysts had originally forecasted that the company would sell between 100,000 and 400,000 units.

The iPad increases competition for Amazon.com’s (AMZN) Kindle, Barnes & Noble’s (BKS) Nook and Sony’s (SNE) e-Reader. The iPad also poses a threat to Hewlett-Packard (HPQ), Acer and Dell (DELL), who relied much on the growth of netbooks. According to sources, Acer is planning to launch a tablet to compete with AAPL’s iPad in the second half of 2010. Hewlett-Packard introduced a tablet called the “Slate” in January and Panasonic’s (PC) “Toughbook” may increase competition for Apple’s iPad.

However, we are highly positive about the company’s iPad launch; the iPad is expected to revolutionize mobile computing and will provide a boost to Apple’s revenue and earnings in 2010.

Second quarter results will not include iPad sales (as the device did not launch until after the period officially ended). Nevertheless, we expect the company to report stronger results in fiscal 2010 due to potential increase in iPad volume.
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