Neil Hughes
While some investors are concerned about Apple's reduced margins in the face of multiple new product launches, one analyst has noted that Apple's margins previously took a hit following the iPhone 4 launch, and subsequently rebounded to new heights.
Chris Whitmore of Deutsche Bank issued a note to investors on Monday calling concern over Apple's near-term margins "overblown." He believes recent hits to the company's stock price have created a "very attractive entry point" for those looking to buy.
"We believe this step down in margins is nearly entirely cyclical and not structural," Whitmore wrote. "In fact, this margin step down is not without precedence. There is a striking parallel between Apple's margin outlook for the iPhone 5 ramp and the prior iPhone 4 cycle — which was the last complete iPhone overhaul."
Following the launch of the iPhone 4 in 2010, Apple's gross margins took a significant hit. Apple advised investors accordingly, guiding margins to about 35 percent, citing "higher cost structures" of the newly launched iPhone 4 and iPad.
But Apple's margins also began to rebound almost immediately in the following quarter as production of the iPhone 4 began to ramp up.
Like with the launch of the iPhone 4 in 2010, Whitmore believes Apple's gross margins will only dip for a single quarter. He also noted that the company typically beats its own margin guidance by between 2 and 4 percentage points. As such, he believes there is "a healthy amount of conservatism" in Apple's margin guidance for the first quarter of fiscal 2013.
Whitmore joins a long list of analysts who have advised investors to stand by Apple in the face of shrinking margins. Apple officials have said they expect the company's margins to improve once production of its new products, namely the iPhone 5 and iPad mini, is streamlined.
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30 Comments
These guys are not to be trusted, any of them.
These guys are not to be trusted, any of them.
I think most analysts are untrustworthy, but his logic and explanation in this case seems sound, no?
Margins? Who cares? Apple has what, 129 billion in the bank?
*If* the odd price of the mini *was* based on margin, then Apple is playing a losers game. They are probably the only company that *can* afford to buy share, and they aren't.
I fear a loss of developer mindshare if they continue with the high-right policy, and the in-house everything. I've been around long enough to see the obvious parallels with the Apple of the 1990s, post Steve-1.0.
Apple=Money Period. Like Maury pointed out, Apple has 129 billion in the bank.Damn! But greed is crazy. We could give Wall Street the printing presses, plates and paper from the treasury department and tell them to go ape sh** with it. You know what would happen? Wall Street would still cry poor mouth. The government could tell the private sector:No more taxes nor regulation. No more paying out to FICA, nothing. But it would still not be enough.
". . . parallels with Apple of the 1990s. . ."!!!! Ridiculous. As pathetically stooooopid as all of this rampant compulsion to predict the future by looking into the past.