Three issues still hanging on Apple
Posted
Jul 22 2008, 03:26 PM
by
Kim Peterson
Rating:
Shares of Apple are down more than 4% today after the company reported a good quarter accompanied by light guidance on Monday. Now that we've had time to digest the news, there seem to be three issues hanging out there:
1. Falling margins. Apple said it expects its gross margin for the next quarter to fall to 31.5% from 34.8% in the previous quarter. And they'll drop again to about 30% in the next fiscal year. Which leads us to....
2. Mystery product. In a conference call with analysts, CFO Peter Oppenheimer said the margin drop is partly related to a "future product transition" that he can't discuss. It's something in Apple's "new product pipeline," he said. That's led to all kinds of speculation about what this future product may be. Discounted Macs? New Apple TV?
It's a rather dramatic move by Apple to invest so much in a mystery product that its margin drops 5%. What's this company got cooking?
3. CEO Steve Jobs' health. When asked about this in the conference call, Oppenheimer said this:
"Steve loves Apple. He serves as the CEO at the pleasure of Apple's board and has no plans to leave Apple. Steve's health is a private matter."
That may be true, but it hasn't seemed to quell speculation about Jobs' health and his thin appearance.
Here's what some are saying today about Apple's news:
BusinessWeek: "Apple is typically tight-lipped about coming products until they're ready to be discussed in detail. But analysts inferred that Oppenheimer means cheaper products are on the way. The most likely candidate: Mac notebooks."
SmartMoney: "There's nothing rotten about Apple's prospects, particularly in light of the grim state of the economy and the trepidation of the U.S. consumer. But Apple's a company freighted with such high investor expectations that, in combination with its conservative guidance history and shrinking margin, it's going to be volatile."
Silicon Alley Insider: "We understand that this is a sensitive subject, and we apologize to those who find it offensive. Steve Jobs is obviously a lot more than a corporate asset, and, again, we hope he is in great shape. But for Apple shareholders, his health is not just a private matter."
AppleWatch: "So what do I think the mystery product is? Microprocessor transition. In April, Apple announced the acquisition of chip maker P.A. Semi. Apple plans to make the microprocessors for some of its products."
