Apple Reports Fourth Quarter Results (opens in new tab)

Overall gross margin is a blend of all your products, that gross margin is where you get the money for everything you do, pay salaries, buy capital equipment, etc. So it really doesn't matter if your margin is lower because you are shipping more inexpensive product (the mix), all that matters is that its lower. That changes the amount of revenue you must have to run the business and increases downside risk if you are close to the edge (as Dan Warmenhoven is famous for saying, you have much more control over margin than you do over revenue).

In the case of the iPad Mini it says that additional growth in the Tablet market is in the lower margin segment. That is accretive if you're holding on to your existing market share at the high end, and dilutive if you're losing high end share to the mid-range or bargain products. Same with phones, lets say the 5C turns out to be "good enough" and sales of the 5S plummet because it's extra cost (and margin) isn't "valuable" enough to the consumer to pay the extra money. Now you have to sell a lot more units to get the same profit, but that requires more "business" (and by that I mean more assemblers, more sales people, more trucks driving around, more logistics, etc.) You lower the price (which increases sales rate, but that also reduces margin, so you have to sell more to make the same amount.

Now I don't think Apple is anywhere near any of that, they are a very strong company with a solid brand. My observation is that the reduction in overall gross margin will come out of the business, whether it fewer product managers for more products, or lower salaries for retail staff, or what, the numbers have to balance.

Generally lower revenues but same margins is a sign so constraints in the supply chain. Higher revenue but lower profits is a sign of margin erosion. Lower revenue and lower profits and lower margins is perhaps one of the most alarming situation.

It is good to push back on folks who thought he tablet was just a fad? You know the ones who said "There isn't a 'tablet' market so much as their is an 'iPad' market." Well those folks have been shown to be mistaken.

I don't own any Apple stock (well I might in my blind 401k but I wouldn't know if I did :-) I've been tempted to pick some up after it dropped from the 700's into the 400's. But the thing that I keep wondering about is their ability to execute in a contested market by a competent opponent. This coming quarter will be an interesting one for everyone I expect.

Lower gross profit margins are probably better explained by either downward pressure on prices or upward pressures on costs of manufacture. It can also be driven by changes in product mix (e.g., higher sales of the lower margin iPad Mini). It's not unreasonable to attribute this to greater competition from lower margin Android products.

I imagine it's common among the Hacker News segment, but what about the average person?

It's now that I don't really feel any compelling reason to upgrade -- even with iOS7 the interface is plenty fast enough, and I don't use it for games so any increases in performance wouldn't really matter to me.

I'm using net income, Samsung has 9.6 operating profit. Why are you showing an article from last quarter?

Doesn't sound like it when looking at the percentage. Apple had a market capitalization of $481,390,000,000 at the market close today. So 3% of that is $14,441,700,000. Seems more significant in whole numbers.

The real thing to consider is that every stock is much more thinly traded in after markets than it is during regular hours. For that reason, the few people trading during that time are typically not representative of the entire investment community.