Analyst: Apple iPhone profits have peaked

Analyst: Apple iPhone profits have peaked
Pacific Crest analyst Andy Hargreaves cut his price target on Apple's shares this morning from $670 to $645. The problem, according to the analyst, is that gross profit margins on the Apple iPhone have peaked and are coming down. According to Hargreaves, the gross profit margin on the Apple iPhone 5 will be 38.8% this quarter. At its peak, Apple was able to generate gross profit margins above 40%. The analyst is cutting his earnings forecast for Q4 to $14.76 per share, from $15.28. For  fiscal 2013, Hargreaves now expects Apple to earn $51.49 per share, down from an earlier forecast of $53.36.

From the launch of the original Apple iPhone to the Q2 of 2012, Apple increased the amount of gross profit it made on each unit sold from less than $150 to $290. But for the first time since the iconic smartphone was released, during the third quarter, Apple earned less money for each unit sold and Hargreaves expects this figure to drop even more in the fourth quarter. Part of the reason behind the slumping gross profit per Apple iPhone sold is the inclusion of an LTE radio and a larger display for the latest variant of the handset.

Even with the trimmed price target and lower earnings estimates, Hargreaves still recommends the purchase of Apple's stock.

source: Forbes

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41 Comments

1. Mr.Mr.Upgrade

Posts: 474; Member since: Aug 30, 2011

The coming Android storm

28. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

No, ifanboy will pay for their iGarget at any price. Apple share will keep rising up.

38. Nadr1212

Posts: 741; Member since: Sep 22, 2012

Ur best days (of the iPhone 5) r behind u, Apple!!!!!

39. PAPINYC

Posts: 2315; Member since: Jul 30, 2011

No, your iBubble has burst! Bienvenue à la morte Pomme de Apple!!!

2. PhoneArenaUser

Posts: 5498; Member since: Aug 05, 2011

I was reading this article and decide to check how much iPhone 5 16GB cost in my country and without any contract iPhone 5 16GB todays cost is 1252 USD... Isn't it ridiculous? :D

8. LOTR12

Posts: 13; Member since: Nov 04, 2012

What country do you live in? In my country(Bosnia) they rarely sell something Apple because it's too expensive(No offence iPhans).

10. PhoneArenaUser

Posts: 5498; Member since: Aug 05, 2011

19. wendygarett unregistered

Wow your country is a very nice place :) I love it

29. PhoneArenaUser

Posts: 5498; Member since: Aug 05, 2011

Thank you. :)

18. XPERIA-KNIGHT unregistered

it is the best joke since Richard Pryor....

36. phil2n

Posts: 519; Member since: Apr 30, 2012

its going down down down down.... i love it

22. htc_prep

Posts: 303; Member since: Oct 09, 2009

i can believe that. people are scamming U.S. carriers and getting these iphones and selling them world wide for 1000-1500 and they are only paying 150- 450 here in the states collecting major profits.

24. XPERIA-KNIGHT unregistered

lol its a dirty game indeed!.......but dont worry cuz apple is most definitely recieving its due, and once the world sees them come down a little, these black market setups wont be able to do what they are doing cuz the interest level will drop dramatically thus causing the price level to do the same... to put it simple.......people wont really care for apple anymore.......not completely! but will, without a doubt, lose interest :)

27. htc_prep

Posts: 303; Member since: Oct 09, 2009

true indeed, but Apple wont put the pressure on Until the big 4 in the US (who market the device with a subsidy)put some pressue on Apple to impose UDID bricking on ESNs, imei, and udids that the carriers report as lost stolen or obtained fraudulently. even though i dont use apple the allure to the products are there and its what that mainstream know as "it" so it will be some time before the hype dies completely

31. XPERIA-KNIGHT unregistered

O of course i wasnt speaking of "over night" changes, just telling what the future holds for apple :) and even right now! .......not neccessarily what we are talking about, but dont doubt for one second that apple isnt experiencing, right now, a portion of whats to come for them

32. wendygarett unregistered

They are hired to do so... If I want an iPhone, I will hire the agent to line up at Cupertino, and ask the agent line up and shout like a sheep and say, hey look at me, I'm a first iPhone owner... Most of the Cupertino liners don't shout it from heart... They shout it for profit from us :)

23. zuckerboy

Posts: 898; Member since: Dec 22, 2011

lol at my country ip5 costs 1600 $ :D

25. PhoneArenaUser

Posts: 5498; Member since: Aug 05, 2011

What country do you live in? :)

30. zuckerboy

Posts: 898; Member since: Dec 22, 2011

Turkey :D and galaxy s3 750 $ :D

35. cretinick

Posts: 148; Member since: Jan 25, 2011

In my country (Brazil), the iPhone 5 don't arrive yet. But the 4S 16GB, in the Apple Store, cost ~960 USD.

41. zuckerboy

Posts: 898; Member since: Dec 22, 2011

we have no apple store in my country :D 4s 16 gb 1000 $ :D but people doesn't complain about smartphones price :D galaxy s3 and iphone 4s sales like hot cakes :D

3. mas11

Posts: 1034; Member since: Mar 30, 2012

I agree. Hopefully this is the year WP becomes popular.

13. Just_a_boy

Posts: 183; Member since: Oct 18, 2011

We hope so, because M$ is burning cash in advertising, and the carriers are working to push Windows Phones sales.

4. user312

Posts: 68; Member since: Aug 21, 2012

Apple's downfall begins........

7. Commentator

Posts: 3722; Member since: Aug 16, 2011

If I had a nickel for every time I've seen someone post that exact phrase on PA (with a differing amount of ellipses at the end, of course), I'd have a sh*t-load of nickels! Incidentally, if I had a nickel for every time I've posted what I just said above, I'd have two nickels!

9. androiddownsouth

Posts: 598; Member since: May 02, 2012

So true. I'm willing to bet when the chips are down, Apple will step up and come up with something pretty sweet. Until then, it's sue, sue, sue!

20. XPERIA-KNIGHT unregistered

the only way they would be able to retain their glory would be to adapt to what and where technology is heading......in which is really a "pick your poison" type of situation, because adapting can also mean copying and we all know where copy cats end up..................................in the court room!

21. androiddownsouth

Posts: 598; Member since: May 02, 2012

I was just saying that I'm sure Apple is capable of coming up with cool stuff, but clearly their focus is not on doing that, and that can and likely will come back to bite them in the a$$.

26. XPERIA-KNIGHT unregistered

...... :)

5. androiddownsouth

Posts: 598; Member since: May 02, 2012

WP8 is a quality phone. I really like the HTC 8X, and the OS is very user friendly and intuitive. A very worthy competitor, and the last coffin nail for BB, imo.

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