Thursday, February 08, 2007, 08:00 am PT (11:00 am ET)
Briefly: Apple may see $3 of added profit on each nano this quarterGross margins for Apple's second fiscal quarter ending March should once see help from tumbling commodity pricing, particularly NAND flash memory.
According to a research report released by Pacific Crest analyst Andy Hargreaves this week, NAND flash memory in January fell 27 percent for 2GB chips, and 33 percent for both 4GB and 8GB.
The analyst said he expects the trend to continue in the coming months, likely generating Apple an extra $3.00 of profit for every iPod nano it sells in the three-month period ending March.
Hargreaves went on to say that the favorable flash price declines should lift the Cupertino-based company's gross margin by 30 basis points (or 3/10ths of a percent) and a penny per-share for every 5 million iPod nanos it sells.
However, the analyst said he does not expect the trend to carry over to Apple's 1GB iPod shuffle, as 1 GB flash memory pricing has remained relatively stable as of late.
During Apple's first fiscal quarter ended December, the company reported gross margin significantly above guidance at 31.2 percent. However, it guided conservatively to 28.4 percent for the March quarter, despite expectations of a continued favorable commodity environment during the quarter.
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