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They Just Don't Get Apple!

NEW YORK (TheStreet) -- Strictly speaking, there is more to new Apple (AAPL) products than jazzy new features. Granted: set beside better resolution, or that new App to solve cold fusion, any mention of cost basis to Apple for the new features is drab. And Apple has, of course, never had a problem keeping margins flush. Moreover, calculating possible margins for a new Apple product is no easy lift. A large element of guesstimating must come into play.

Still: in reading coverage of Apple's unfurling of the new iPad, traders are hard pressed to find even a passing mention of shifting cost (one way or another) to Apple.

Forbes highlighted the lower sticker price for the new iPad, but nothing on its potential profitability. Investor's Business Daily mentioned the cost of a single component, but nothing larger. The Associated Press let us know what we already did: other companies--like Hewlett-Packard (HPQ) --have trouble getting components at Apple's prices, but zero on trends in Apple's cost basis for its new tablet.

To its credit, The Wall Street Journal put on its hip-high boots and waded into the difficult, yet essential topic: "Apple Inc. may be giving up a bit of profit margin because of the sophisticated display and other features in its new iPad, a research firm estimates in a preliminary cost analysis of components in the new tablet. UBM TechInsights on Thursday estimated a cost to Apple of about $310 for the components in a version of the new iPad that offers 4G wireless connections and 16 gigabytes of data storage, a model set to sell for $629. Those estimates would suggest a 51% gross margin, or the profit to Apple after materials costs." (This compares to a 56% margin at release time for the iPad2, 53% now.)

Even if imperfectly, traders must, like the Journal, keep one eye on the jazzy new features and one on potential cost.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page.

For his "Business Press Maven" column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers.

Fuchs appreciates your feedback; click here to send him an email.

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