(AAPL) Apple to Launch iPad3

According to reports from the Economic Times of Taiwan, Apple Inc. (AAPL) will release its third generation iPad, iPad 3, this September, well ahead of the expected launch date of March 2012.

The next generation iPad is rumored to have an unmatched graphical resolution with six times the screen resolution than the present iPad 2, coupled with 3D capabilities for viewing movies and apps.

According to another source, PCMag.com, movie studios are in a hurry to provide the media for the 3D enabled iPad 3, which is set to usher in movie watchers in another dimension. Also, the studios have noticed the popularity of the product and seem to be making a genuine effort to cash in on the growing popularity of Apple’s products.

There has been a spontaneous surge in the use of technology among the small and midsized businesses and this has resulted in the increased adoption of tablets and new tech tools. Tablet manufacturing companies have identified this beneficial opportunity and are making every effort to reach out to seize this uptrend in the technology arena.

We believe the rumor of the product launch has seeped in at the perfect time, as the competition is heating up with Hewlett-Packard Company (HPQ) in the tablet segment. HP has set July 1, 2011 as the release date for its latest touchpad. Also, Intel Corp. (INTC) has plans to release its latest “Ultrabooks” that are expected provide stiff competition to the iPad.

If Apple genuinely decides to launch its iPad 3 this September, it would give the company the much needed support amid all the problems faced by Apple in recent times.

Of late, Apple has been entangled in legal battles pertaining to patent rights with HTC, Eastman Kodak Co. (EK) and Samsung. Moreover, last week, Apple settled the patent dispute with Nokia Corp. (NOK), but will have to make a one-time payment to the latter apart from regular royalties going forward.

Additionally, Apple and Google Inc. (GOOG) is facing increasing scrutiny from the US and European regulators for their alleged role in infringement of users’ privacy. We believe Apple’s iAd business will be impacted by increased legislation to protect user privacy. Year -to -date, there have been at least five related legislations, three of which were designed to empower users to turn off tracking.

No doubt, Apple is a great company with a loyal customer base, international expansion, competitive pricing strategy and a solid cash position. We remain positive on Apple’s long-term growth. However, increasing competition in most of its major product segments, possible delays in product launch, higher operating expenses and increasing legal complexities compel us to maintain our Neutral rating over the long term (6-12 months).

Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term.

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