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  • squeezetracker squeezetracker Jan 16, 2013 2:14 PM Flag


    Margin will not be compressed down to where they guided for this bigger than ever new products Q with its attendant production learning curves, spiffs for 24/7 shifts and up to triple overtime pay, accelerated distribution costs such as overnight Fedex planes vs freighters, parts sourcing strains, throughput yields, and all of those issues magnified by entering dozens of new markets forever. Why?

    First, they sandbagged margin guidance for all of those reasons.

    Second, most of those margin haircuts (except for wrt the Mini iPad) were either fully resolved by the end of the December Q or shortly thereafter.

    Third, supply/demand are in balance now with the i5 (they are keeping the i5 production lines open during the chinese new year's celebration coming right up for only the second time in history, so production will not be slowing down anytime soon).

    Fourth, it is likely that the original Mini iPad production is now up the yield curve, too... such that supply/demand balance is close now with the inferable result that margins are already improving.

    Fifth, concerns over the Mini's cannabilization of the full size options (happening on unit q) will assuredly be moderating by the reality that the $329 price point is not applicable to 5 of 6 of the Mini in the product lineup.

    Sixth, the app store news is not yet even understood, let alone discounted... combined with music (rumored streaming service adjunct to iTunes coming), service and the other lines the sellside glosses past, these revenue sources are growing faster than 25% and much of it has upper limit operating leverage of flatlining (sunk) costs. Further, these revenue sources are about to soar on the new markets/products which just last week Cook emphasized would soon zoom past the U.S. market importance for AAPL.

    Seventh, the mapping function is being improved daily and to the extent the present search options being driving meaningful mobile revenues for the engines, it is likely AAPL will get a share.

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