Higher Production Costs Will Eat into iPhone Profit Margins

1nDsDmwjsuxhZSJH hugeAccording to a Forbes report, Apple can expect to make less money from each iPhone 5 produced and might not ever get back to the vaunted 40% margins they once enjoyed.

While mass production does tend to lower prices in general, seems that the component parts for the iPhone 5 might be more costlier now than they were before eating into Apple’s profits:

Hargreaves lifted his estimate on December quarter cost of goods sold for the iPhone 5 to $370, from $353, which brings the gross margin for the phone down to 38.8%, [sic]from 40%. That in turn trims his EPS forecast for the quarter to $14.76, from $15.28. For FY 2013, Hargreaves trims his estimate to $51.49, from $53.36.

Hargreaves contends that Apple’s gross profit dollars per unit “has likely peaked.” He sees declining gross profit dollars per iPhone and volume sales of iPad driving lower gross profit per unit of Apple product sold.
From: Forbes

But, let’s keep things in perspective here, okay? This chart form Statista shows how Apple is blowing away it’s competitors, even when you combine their profits:

ChartOfTheDay 735 Apple s Astonishing Profit in Context n

So I wouldn’t worry that Apple is only making 38.8% profit on each iPhone 5.


iPhone 5 image from iFixit.

Like this post? Share it!