“One of the major reasons that Apple’s shares have declined from $609 the day of October’s earnings announcement to $527 was the company’s gross margin of 40.0% in the September quarter and its guidance of 36.0% for the December quarter,” Chuck Jones writes for Forbes. “These compare to 44.7% in the December 2011 quarter and 47.4% at its height in the March 2012 quarter.”
“One of the major reasons for the 36% gross margin guidance is due to about 80% of the products Apple is shipping in the quarter being new (iPhone 5, iPad 4, iPad mini, new Macs and new iPods),” Jones writes. “This means the company’s component suppliers and manufacturers are at the lowest production yields and therefore highest costs.”
Jones writes, “For the December 2012 quarter I am estimating total revenue of $57 billion (vs. guidance of $52 billion and the Street at $54.4 billion) with iPhone sales of 50.5 million units, $32.6 billion in revenue and 57% of total revenue. While there are higher costs associated as mentioned with all the new products and especially the iPad Mini whose sales have been very strong (which probably has lower gross margins than the iPad) I believe total gross margins in the December quarter could approach if not be higher than 40%.”
Find out how Jones arrives at his gross margin estimate in the full article here.
Cue the analysts hit whores….
Apple picks their prices and terms. Apple will state again, “We would have sold more if we could have made more.” And yet, sorrow and despair. ONLY $150 BILLION IN THE BANK!!! WE WANTED $200 BILLION!!!!
If Wall Street were to apply the standards that it slaps on Apple, then every company in the US would be bankrupt. Since this not the case, as Amazon with the slimmest of profit and and a P/E of 3,500 can be massaged to be Wall Street’s poster boy, Wall Street’s doublespeak and loose standard is legendary.
Don’t know if the specific numbers will prove to be accurate, but at least this guy’s logic is sound. He is also predicting better performance than Apple’s own guidance and that of the Street. If Apple does indeed move to a 6-month cycle on iPhone and iPads, their margins ARE likely to shrink. There are huge upfront investments in development and manufacturing setup.
Maybe not. It could be true if they came out with totally new products every 6 months. If the goal is partly to smooth out production levels then maybe they will spread out costs as well. Instead of putting all new features in a new phone each October they might put some into a spring update. This might even lower some costs since there wouldn’t be such a crush of activity once a year.
Nice Spark. A ray of logic in the sea of pissed off underwater AAPL investors and fanboys here.
Basing stock value on gross margin must explain Amazon’s rise from 230 to 260 (approximately) over the same period.
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