“With Apple’s September quarter having come and gone with the only major product transition consisting of slightly cheaper iPods, investment bank Piper Jaffray believes the company is once again in a position to outperform its own margin guidance despite widespread concern,” Katie Marsal reports for AppleInsider.
“The Cupertino-based company during a conference call in July guided its September quarter gross margin down 330 basis points sequentially to 31.5 percent, citing expected impact from a mysterious product transition, a full quarter of back-to-school promo sales, and a one time true-up with a manufacturing partner,” Marsal reports.
“The lower-than-expected guidance was of immediate concern to investors, but as analyst Gene Munster points out in a new report Tuesday, the quarter has since ended and none of the company’s actions seem to warrant such a drop-off in margins,” Marsal reports. “‘Apple cited new, lower-margin products, but the only new products announced in the September quarter were new iPod nanos with higher capacities at the same prices and a 23 percent price cut on the iPod touch,’ he wrote. ‘Considering the decline in NAND Flash pricing has been at least in-line with typical seasonality, it is unlikely that these changes will result in a greater than average sequential GM decline.'”
Marsal reports, “In other words, Munster believes the falling cost of NAND flash memory — historically the most expensive component used in iPods — will offset any reductions in the retail price of the players instated by Apple… Munster said he remains confident in his September quarter gross margin estimate of 32 percent.”
More in the full article here.