tag:blogger.com,1999:blog-2991101600248617596.post7011769642021559472..comments2023-11-14T02:15:06.159-06:00Comments on Financial Alchemist: Apple Inc (AAPL): iPhone's Substantial Impact on Gross MarginTurley Mullerhttp://www.blogger.com/profile/01407515956935491747noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-2991101600248617596.post-28815822860716536352009-09-22T13:46:00.234-05:002009-09-22T13:46:00.234-05:00Mr. Muller,
Does AT&T keep any revenue from t...Mr. Muller,<br /><br />Does AT&T keep any revenue from the iPhone? According to your analysis above, the answer is no. However, AT&T's 2008 annual report states, "Total equipment costs continue to be higher than equipment revenues due to the sale of handsets below cost.." This implies they do take some revenue from handsets, does it not?Ludoghttps://www.blogger.com/profile/01360003430335303791noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-10993854095117729062009-09-18T19:16:26.780-05:002009-09-18T19:16:26.780-05:00Turley, I see Apple doubling from here now that th...Turley, I see Apple doubling from here now that the street is realizing iPhone's earnings potential, please give us an update as how u feel going forward. Thank U !Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-70009110002450152482009-09-04T09:42:05.706-05:002009-09-04T09:42:05.706-05:00Mr. Miller,
There is talk now that Apple may aban...Mr. Miller,<br /><br />There is talk now that Apple may abandon subscription accounting and that this could cause a huge pop in stock price. Do you think this could happen? Thank you! Enjoy your work! <br /><br />Mike<br />mconnors@me.comUnknownhttps://www.blogger.com/profile/13723642445223713793noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-90740043651963328562009-08-08T23:36:35.534-05:002009-08-08T23:36:35.534-05:00Turley,
I enjoy your work very much. You've ...Turley,<br /><br />I enjoy your work very much. You've got quite a gift for it.<br /><br />Now that you've got your analysis down to the penny (and of course we all expect it to stay there!) how do you use that to influence your investing behavior?<br /><br />At what price per share would you consider AAPL to be fairly valued now, such that you would be neither hot or cold to it?<br /><br />Do you have any speculation on how PA Semiconductor will be used to differentiate products?<br /><br />Hope to read more of your work soon.<br /><br />LeeLee Penickhttps://www.blogger.com/profile/10220839564066969299noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-67296568293666039182009-07-31T11:04:03.214-05:002009-07-31T11:04:03.214-05:00Prepaying for components (on Apple's scale at ...Prepaying for components (on Apple's scale at least) is a double edged sword - Apple gets best price (and price and supply stability) PLUS the shortage runs up the cost for competitors.<br /><br />For as long as the iPhone train is gaining momentum the deferred revenue accounting treatment provides an 18-24 month cushion even when ceiling is reached. However, their market share is still so small overall and the potential for complimentary products (iPhone nano) so great that AAPL is going to remain an exciting investment for some time to come. <br /><br />Even the P/E is not overly aggressive (c. 22.5x) when you net out the cash.<br /><br />GBAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-2982646269186279372009-07-30T07:51:34.902-05:002009-07-30T07:51:34.902-05:00Additional congrats, mentioned on Fortune.com'...Additional congrats, mentioned on Fortune.com's homepage:<br /><br />http://brainstormtech.blogs.fortune.cnn.com/2009/07/29/report-iphone-margins-are-nearly-60/Michael Lawrencenoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-75606709468048624732009-07-30T04:53:24.699-05:002009-07-30T04:53:24.699-05:00Congrats my friend you have been mentioned in ZDNe...Congrats my friend you have been mentioned in ZDNet Tech news!<br /><br />http://blogs.zdnet.com/BTL/?p=21926<br /><br />Keep up the outstanding work.<br /><br />HHThe HardHeadhttps://www.blogger.com/profile/05907740113788877539noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-60348442320361452872009-07-30T00:54:16.810-05:002009-07-30T00:54:16.810-05:00It is quite a good, nuts-and-bolts analysis. I cou...It is quite a good, nuts-and-bolts analysis. I could follow it even though it's not in my line. <br /><br />One point, though. Apple's at about $160 per share, and its P/E is 27.97. A very basic GARP rule of thumb says that the P/E should be less than or equal to EPS growth rate [for mathies: EPS GR multiplied by 100.] I performed a brute-force calculation of Apple's 10-year EPS growth rate: I got 19.3%.<br /><br />Apple may very well be in for more margin growth, but there's a certain point when the share price has already discounted it. That rule I invoked is very basic, of course, but it does suggest that Apple's valuation isn't compelling at this price level.Daniel M. Ryanhttp://lowpebin.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-62864992671860709252009-07-29T17:04:29.919-05:002009-07-29T17:04:29.919-05:00I included shipping costs as it's a component ...I included shipping costs as it's a component of "cost of goods sold" <br /><br />Marketing and R&D expenses are not part of COGS therefore not included in gross margin.Turley Mullerhttps://www.blogger.com/profile/01407515956935491747noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-25460606652992591682009-07-29T17:02:02.019-05:002009-07-29T17:02:02.019-05:00The subsidy number I have derived from a number of...The subsidy number I have derived from a number of sources.<br /><br />1- I know what Best Buy pays Apple per unit, and I know what AT&T reimburses Best Buy for- it's $400. The $375 Subsidy is a blend of wholesale price and Apple's direct sales where it captures the entire subsidy. <br /><br />2- Using AT&T and Roger's wireless SEC filings and comments regarding impact from subsidy, it's possible to back into the number. <br /><br />3- Taking cash value of phones sold as given by Apple and then dividing it by units gives ASP. Take that price (Apple receives per unit) minus the price customer pays, and the difference is the subsidy, or what AT&T kicks in. <br /><br />I don't just pick arbitrary numbers, I use estimations that are supported by multiple sources and calculations. I take my analysis very serious, and wouldn't publish something that can't be backed up with math.<br /><br />There are numerous figures in Apple's SEC filings that, by themselves, don't provide much insight. But applying mathematic principles, many unknowns can be backed into.Turley Mullerhttps://www.blogger.com/profile/01407515956935491747noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-58974473050685843342009-07-29T16:52:44.615-05:002009-07-29T16:52:44.615-05:00Where did the $375 flat subsidy-- per model --numb...Where did the $375 flat subsidy-- per model --number come from? I have never seen that number talked about, written about, or even publicly available before. Is this an arbitrary guess on your part or is there Apple or AT&T documents that quote this number. Frankly, I don't believe the iPhone is carrying anywhere near that margin based on what I know from sources inside Apple of the margins on the iPods. The number, 60%, is almost an order of magnitude higher than iPod margins and the components for the iPhone (even in the volumes we're talking) are still more expensive when put together in the device.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-19027709652805994802009-07-29T15:38:08.015-05:002009-07-29T15:38:08.015-05:00What about distribution costs, marketing costs, re...What about distribution costs, marketing costs, research costs did you forget themUnknownhttps://www.blogger.com/profile/06703673089455109428noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-21917623933945986162009-07-29T13:59:03.733-05:002009-07-29T13:59:03.733-05:00Prepaying for components, such as flash should ben...Prepaying for components, such as flash should benefit Apple allowing it to get a better deal. Since Apple is such a dominant player, ie buyer of flash, it has leverage over suppliers. <br /><br />Thus, getting components at a more favorable price lifts gross margins.<br /><br />The prepayments though don't have any effect yet as those contracts have yet to be filled, but will in coming quartersTurley Mullerhttps://www.blogger.com/profile/01407515956935491747noreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-12873666651952404442009-07-29T13:54:18.042-05:002009-07-29T13:54:18.042-05:00How does Apple prepaying vendors for flash memory ...How does Apple prepaying vendors for flash memory affect gross margins?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2991101600248617596.post-80073774935242129442009-07-29T10:21:52.384-05:002009-07-29T10:21:52.384-05:00Great article, awesome analysis.Great article, awesome analysis.Oresteshttps://www.blogger.com/profile/13575639589687183953noreply@blogger.com