Apple poised to benefit from falling component prices

Apple poised to benefit from falling component prices

Summary: Apple is likely to post better profit margins in its June quarter due to lower-than-expected memory and display costs.

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TOPICS: Apple
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Apple is likely to post better profit margins in its June quarter due to lower-than-expected component prices.

In a research note, Shaw Wu, an analyst at Sterne Agee, raised his estimates for Apple's fiscal third quarter. Wu now sees Apple earning $5.95 a share on revenue of $24.6 billion. Wall Street is expecting profits of $5.70 a share on revenue of $24.7 billion.

Why is Wu so far ahead of consensus earnings estimates? Cheaper memory and display pricing. As a result of better pricing, Apple is expected to report gross margins of 39.8 percent in the third quarter compared to 38.96 percent among other analysts.

Wu said:

Since we raised estimates in late May due to our checks of better iPad component availability and yields, we have picked up that overall component trends continue to improve (memory, NAND, and displays) through July, which has helped make pricing more favorable and we believe will benefit Apple, which has proven in the past to be among the most adept in taking advantage of lower pricing. This is the opposite of what we saw earlier this year due to the unfortunate events in Japan where component pricing is now more a tailwind as opposed to headwind.

Wu is ahead of what is likely to be a bevy of bullish analyst updates ahead of Apple's quarterly report. Demand for Apple's iPad and a continued international rollout of the iPhone will fuel results. Wu is expecting Apple to move 6.8 million iPads, 17 million iPhones, 3.9 million Macs and 8.3 million iPods in the fiscal third quarter.

Apple will report earnings July 19.

Topic: Apple

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33 comments
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  • This is great news for everyone who loves Apple!!

    Sure, some might suggest that a truly competitive marketplace would result in lower costs being passed onto the consumer in the form of lower prices but the truth is that Apple invented the iPad market and deserves to become as rich as we can possibly make them. I know that I'll be buying an iPad 3 when it comes out, no matter how much Apple charges and I know that others on ZDnet like DeRSSS and dave95 and Richard Flude will too! YEAH!!!
    woulddie4apple
    • RE: Apple poised to benefit from falling component prices

      @woulddie4apple Itll be magical and revolutionary!
      Tommy S.
      • RE: Apple poised to benefit from falling component prices

        @Tommy S.

        And the rest will be derivative and shoddy, What is your point?
        DeusXMachina
    • RE: Apple poised to benefit from falling component prices

      @woulddie4apple

      Troll
      DeusXMachina
      • Hi DeRSSS!!

        @DeusXMachina
        Using a different alias I see! YEAH!!!
        woulddie4apple
      • RE: Apple poised to benefit from falling component prices

        @woulddie4apple<br><br>If you'd bother to check your facts (and why would you do that?) you'd see that I have been posting here since well before deRSS even started. You are still a little troll.
        DeusXMachina
    • RE: Apple poised to benefit from falling component prices

      @woulddie4apple

      Count me in, too!

      woulddie4woulddie
      brian ansorge
  • RE: Apple poised to benefit from falling component prices

    lower component prices and yet the price of the product will never go lower... indeed, more profit form the already highly profiting apple...
    zaghy2zy
    • RE: Apple poised to benefit from falling component prices

      <nt>
      DeusXMachina
    • RE: Apple poised to benefit from falling component prices

      <nt>
      DeusXMachina
    • RE: Apple poised to benefit from falling component prices

      @zaghy2zy

      And when the prices go up (which they did, they are now just starting to come back down) you don't praise them for leaving the prices the same. Hypocrite.
      DeusXMachina
    • Your comment was so nice

      you had to troll it thrice!
      woulddie4apple
      • RE: Apple poised to benefit from falling component prices

        @woulddie4apple

        Try looking up the definition of troll, idiot.
        DeusXMachina
    • RE: Apple poised to benefit from falling component prices

      @zaghy2zy ofcourse. they dont give a fk about their consumers at all. They only care about their profits.
      Jimster480
      • RE: Apple poised to benefit from falling component prices

        @Jimster480 As DeusXMachina already pointed out they didn't raise retail prices on the iPhone when component prices went up. Did you praise them at that time? Of course you didn't as praising Apple for anything would go completely against your religion.

        Apple is a business and they are in business to make money just like everyone else. If they need to lower prices they have the margins to do so but at this time it doesn't appear that they need to. This should scare the hell out of the competition as if they need to they can drop the retail prices across all their products, something the competition doesn't have the luxury of doing.
        non-biased
  • RE: Apple poised to benefit from falling component prices

    Apple has always been a pig at the trough of profits. They have overcharged for their products for years, and now they are making even more obscene profits. This is why I will NEVER buy Apple products if I can avoid it. I encourage those thinking of buying Apple to reconsider and check the rest of the field out.
    Garreth49
    • RE: Apple poised to benefit from falling component prices

      @Garreth49
      And when they do, if they know what they are talking about (unlike, say, yourself) they will see that Apple prices their products competitively.
      There is a reason that magazines like Computer Shopper and PC mag ROUTINELY rate various Macs as "best buys".
      DeusXMachina
      • I totally agree with you

        @DeusXMachina
        Anyone who buys anything not made by Apple is an idiot. So glad you and I think exactly the same.
        woulddie4apple
      • RE: Apple poised to benefit from falling component prices

        @DeusXMachina

        That's because they only compare them against hp, dell, toshiba and sony. It's pretty obvious the deck is stacked. All of them get parts from the same manufacturers.

        The entire market is guilty of price fixing, but that's just the beginning of apple's game.
        Ternarybit
      • RE: Apple poised to benefit from falling component prices

        @KittyK4t

        Bull. First you clearly know nothing about built to spec hardware. Second, there is NO evidence of collusion, nor would it make sense. Third, they compare to a broad field of manufacturers.
        DeusXMachina