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AAPL's gross margins

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April 22, 2013 – Comments (6) | RELATED TICKERS: AAPL

In 2012, Apple's gross margins stood at 43.9%.  43.9%!  This isn't the first time that Apple's gross margins have been this high, though...

Apple had a year of nearly 44% gross margins back in 1992.  But the annual gross margins in the subsequent 4 years, starting in 1993: 34.2%, 25.5%, 25.8%, and 9.8%. 

What's that thought behind the mean reversion of profit margins, again?  Did the market really "overreact" after the 6 point drop in gross margin last quarter?

Those profit margin #s are courtesy of the Brooklyn Investor, by the way.  I suggest reading his post on Apple's valuation.  And just for the record, I'm not implying that Apple's profit margins are going to mimic what happened in the 1990s.  I just thought the numbers were interesting...

http://brooklyninvestor.blogspot.com/2013/04/newtons-apple.html 

 

6 Comments – Post Your Own

#1) On April 22, 2013 at 4:41 PM, ElCid16 (94.86) wrote:

Another interesting "nugget" is AAPL's stock price appreciation following the initiation of their dividend in 1987.  The stock fell about 50% over the subsequent 10 years, verus a rise in the Dow Jones Industrial average of about 200%.

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#2) On April 22, 2013 at 4:49 PM, L0RDZ (84.44) wrote:

Wow Apple  had a  dividend back  than  ?   I  guess cooking  the books   didn't  work  back in those days...

 

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#3) On April 22, 2013 at 8:11 PM, NewAlchemist (37.62) wrote:

Apple's margins are going to go down.

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#4) On April 23, 2013 at 4:03 PM, rofgile (99.30) wrote:

Thanks for the post.  This helped make my decisions on AAPL investing.  If you read the Brooklyn Investor, he makes a strong case that margins falling will lead to a lower net value of the stock.

However, he also recognizes that margin predictions alone are only half the story - as the change in revenues is just as important.

I feel that margins will only decrease slightly over time, but revenues will increase.  No debt and cash will increase.  And, even though competition is there - the Apple ecosystem will remain viable.  From 2000-2013, a whole generation of college graduates also learned on Apple - and apple is an increasingly viable business solution.

So.. I think Apple is overall a fairly good investment among all other possibilities right now. 

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#5) On April 23, 2013 at 5:57 PM, ElCid16 (94.86) wrote:

I feel that margins will only decrease slightly over time

I'm no fortune teller.  I'll just put this out there.   

FY 2012 gross margin: 43.9%

FY 2013 Q1 gross margin: 38.6%

FY 2013 Q2 gross margin: 37.5%

FY 2013 Q3 gross margin (forecast): 37%

You're likely looking at a 6 percentage point decline in gross margins - in just one year.  Isn't there too much uncertainty with Apple?

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#6) On April 24, 2013 at 10:33 AM, jiltin (27.16) wrote:

If gross margin, Net income reduces, Institutions likely sell them. Restless Institutions apply more pressures on Tim.  Who wants to bet on losing horse?  At this stage, TIM cook buysback shares, it is easy for Hedgefunders/Institutions to cash it and go away.

Rather than beating competition and adding customer base, Tim looks digging his own grave !

  

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