toggle

AAPL Stock: 98.38 ( 0 )

Printed from http://www.macnn.com

Apple talks mysterious 'product transition'

updated 11:00 pm EDT, Mon July 21, 2008

Apple's mystery transition

One of the most interesting things to come out of Apple Apple's Investor Conference Call today has to do with what CFO Peter Oppenheimer would not talk about -- a mysterious "product transition." Oppenheimer told analysts that the transition will affect earnings in the September quarter and into next year, but --- in keeping with Apple's long-standing policy of not commenting on future products -- he did not elaborate. Apple's profit margin in the third quarter was about 35 percent. The company's forecast calls for that margin to drop to 31.5 percent in the current quarter.

Besides the product transition, Oppenheimer says margins are also being impacted by a back-to-school promotion that gives Mac buyers a free iPod and by accounting charges related to the iPhone. The company says rising component prices and product development costs will continue to put pressure on margins into next year. Oppenheimer says Apple is also keeping an eye on the current economic climate, but so far the downturn has had little impact on sales.

Apple's iPod sales remain brisk at 11 million, although customers seem to be snapping up a lot more of the cheaper Shuffle models. Oppenheimer says the company is also seeing "some cannibalization," of iPod sales by customers who buy an iPhone instead. But he said if "there's going to be cannibalization, we'd rather it be by the iPhone."

Reaction from Wall Street was less than positive. Even though Apple reported its best June quarter earnings ever, investors appeared focused on the future, with the after-hours stock price down nearly 10 percent. Still, Oppenheimer says the outlook is largely positive, with new products in the pipeline. And it may be important to note that Apple has a long record of issuing conservative earnings forecasts, only to top them.




by MacNN Staff

POST TOOLS:

TAGS :

toggle

Comments

  1. dagamer34

    Joined: Dec 1969

    -4

    Here's a scenario

    Apple transitions it's highest storage level iPod from the iPod Classic to the iPod Touch. They ditch the iPod Classic and declare their entire lineup to be hard drive free. Steve cuts the price of the 32GB iPod Touch to $399 and introduces the 64GB iPod Touch at $499. (that's where they loose some money).

    The crowd oohs and ahhs.

    Comment buried. Show
  1. robttwo

    Joined: Dec 1969

    -19

    actually

    The product transition is Steve's retirement due to his health. Why do you think the stock took a 10% dive tonight in after hours?

  1. Peter Bonte

    Joined: Dec 1969

    +3

    Hot air, cool-aid

    This phrase is important:"Apple introduces new products that initially cost more because they deliver a new level of value to the customer. Then drive costs down and staying out of reach of our competitors. Apple will follow this plan again in the future."Macs and ipods can use a small pricecut and/or update but they are not hugely overpriced, the MacBook Air on the other hand is overpriced and has to compete against $300 mini laptops. A low-cost laptop or small tablet / big ipod seems like a nice addition to the current product lineup. Fingers crossed

  1. testudo

    Joined: Dec 1969

    -5

    hey

    didn't they talk of a product transition sometime in the last couple of quarters as well?

  1. Guest

    Joined: Dec 1969

    +2

    Don't foam at the mouth

    It is amazing to see the Mac faithful on other sites project all their product fantasies onto the slightest hint of a change at Apple.

    I take this to be purely financial: you don't decrease margins by introducing radical new market-shaking products, you do so by either cutting price or increasing cost on products that you already have. This is the CFO talking, not product engineering.

    I would look for increases in memory capacity on iPods or a large shift in iPod pricing. That's where Apple has competitors, even if they are weak.

  1. testudo

    Joined: Dec 1969

    +2

    Re: Here's a scenario

    It's "lose", not "loose"! You lose your car keys. You dog gets loose and attacks the neighbor's cat.

    Why can't people freakin' get these words correct???

  1. Nai no Kami

    Joined: Dec 1969

    +2

    Re: Re: Here's a scenari

    testudo: Would you marry me?

  1. sgirard

    Joined: Dec 1969

    -3

    My Bet

    I'm guessing the "product transition" is Apple making a move to license Mac OS X to Dell, HP, and others.

  1. Guest

    Joined: Dec 1969

    +1

    Product Transition

    This is just a shot in the dark. Last I checked Intel wasn't the only X86 cpu maker in the industry. Maybe AMD is talks with Apple regarding a value proposition that Intel can not match. I.E. ATI Graphics AMD CPU AMD motherboard..... at least for the consumer level products. What do you guys think?

  1. paulc

    Joined: Dec 1969

    +1

    GM

    With a gross margin almost 35%, they could easily lose 25% if the retail pricing and still be profitable.

    Like going up 0.2G in CPU speed, it costs them about 50 bucks but they extract 800 bucks at retail. And from reading the posts around the web, it sure seems LOTS of folks are going for such things...

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

MacNN Sponsor

Recent Reviews

Adesso Xtream S3B Bluetooth speaker

Finding a speaker purpose-built for a specific need is challenging. Even when a Bluetooth speaker can be paired with a mobile device, ...

JBL Synchros E40BT headphones

For all the different configurations of headphones on the market, it's always a tough choice for buyers to get something that is just ...

Razer Taipan mouse

The list of gaming devices is growing larger with each passing day. A large number of companies have entered the gaming input arena, a ...

toggle

Most Commented