updated 02:55 pm EDT, Mon August 20, 2007
Gross margins to grow 5%
Amid rumblings that increasing component costs may eat into Apple's profit in the near-term, some analysts are predicting that the company will be able to maintain gross-margin growth despite the higher goods prices. MarketWatch quotes Pacfic Crest analyst Andy Hargreaves, who thinks Apple still should be able to grow its gross margins by almost 5% for its 2007 fiscal year. "In a research note, Hargreaves said that the expected increases in the costs of items such as flash memory and LCD panels will likely affect the gross margins of Apple's iPods, Macintosh computers and iPhones in its current fiscal fourth quarter. However, Hargreaves said that gains Apple has made due to lower component prices earlier this year, as well as being at the early stage of a new product cycle, should help the company's margins improve from a year ago."
Shares of Apple Inc. were on a rollercoaster ride last week, going from ~$124 on Wednesday to ~$112 on Thursday, then back up to ~$122 on Friday. The reason for the initial dip may have been pure profit taking by investors who have seen tremendous gains in the stock this year. The shares are up nearly 80% from a year ago. Shares remain relatively flat in mid-day trading Monday.