updated 02:30 pm EDT, Wed July 29, 2009
Apple boosts iPhone margin
Following the recent disclosure of Apple's Q3 financial data, analyst Turley Muller has taken a closer look at the company's margins. In his blog Financial Alchemist, Muller suggests the iPhone's gross margins have continued to increase and now sit just shy of 60 percent.
Although Apple chooses to keep quiet on specific details regarding iPhone costs and margins, while consistently underestimating GM in its guidance, Muller claims the handset likely contributes as much to the company's EPS as its Mac sales. He also expects the iPhone's EPS contribution to surpass the computer sales in the future quarters.
Muller believes Apple was able to "subsidize price cuts" across much of its Mac line, without dropping its GM, by taking advantage of the continuing rise in iPhone margins. The company recently updated its MacBook line with improved specs and lower prices, while continuing a back-to-school promotion offering a free iPod touch. Meanwhile, prices for commodities, components and energy continued to increase.
Apple's Q3 data did provide a breakdown of Mac and iPod revenues, confirming declines across its notebook and desktop systems. iPod revenue also slid by 11 percent, although the "other music related products," including iTunes sales, were up by 17 percent. Aside from margins, iPhone shipments increased by 626 percent and contributed to the company's best non-holiday quarter yet.
Many analysts expect Apple to beat its guidance of 34 percent GM for Q4, as iPhone distribution continues to strengthen. Unconfirmed rumors suggest the company could also be preparing to launch a new tablet device, although it is unclear if such a product will arrive in the current quarter.