Seeking Alpha

Citi's Glen Young is raising fresh gross margin concerns about Apple (AAPL +0.1%), which is...

Citi's Glen Young is raising fresh gross margin concerns about Apple (AAPL +0.1%), which is trading near breakeven on an up day for tech. Yeung, who cut Apple to Neutral last December and issued another downbeat note last month, sees margins pressured by the arrival of a cheaper iPhone and a "sub-$250 iPad Mini," as well as an iPhone mix shift towards older models. Apple is guiding for its gross margin to fall to 36%-37% in FQ3 from 37.5% in FQ2 (-990 bps Y/Y), as lower revenue and mix offset a drop in component costs. (more margin commentary: Horace Dediu, Gene Munster, Wells Fargo/BMO)
Comments (13)
  • milehr
    , contributor
    Comments (475) | Send Message
    Does anybody get tired of this nonsense?
    28 May 2013, 12:02 PM Reply Like
  • aardvark3
    , contributor
    Comments (339) | Send Message
    It will be over soon. They can only purge for so long and they'll run out of venom. So tiresome.
    28 May 2013, 12:26 PM Reply Like
  • rocback
    , contributor
    Comments (975) | Send Message
    Yes, I do. How many times and ways can these people say the same thing over and over again?
    28 May 2013, 02:30 PM Reply Like
  • madness1089
    , contributor
    Comments (216) | Send Message
    Very tiring. We know exactly what range Apple will report in the fall. Oppenheimer told us GROSS MARGIN GUIDANCE and REVENUE GUIDANCE. Don't need Glen Yeung guessing wrong.
    28 May 2013, 03:35 PM Reply Like
  • u01bsb0
    , contributor
    Comments (617) | Send Message
    "raising fresh gross margin concerns" .....yawn
    28 May 2013, 12:52 PM Reply Like
  • Valuable Insights
    , contributor
    Comments (485) | Send Message
    Margins will also be hit by rising commodity component costs i.e .MDRAM and NAND in our opinion Samsung's slower capacity adds is doing Apple no favors.
    28 May 2013, 01:10 PM Reply Like
  • imac007
    , contributor
    Comments (441) | Send Message
    Points to ponder.
    1. China face higher levels of inflation than here.
    2. Foxconn already increased margin by 7.7%, according to their last quarterly.
    3. Apple's last report had already incorporated that increase.
    4. Inflation there is going to need to be passed on everywhere. There seems to be an attitude that higher retail prices are not a possibility. I say they are inevitable.
    5. Asian competition will be the hardest hit by inflation.
    5. iPad mini was destined to flop because of its price point. Did that happen?
    6. They will now have most of the R&D and setup costs behind them. That will translate into higher margins on any existing device they continue to market.
    7. Suppliers, for those devices, can absorb the inflation, with those same initial costs out of their way, and still enjoy healthy margins.
    8. Once Asian infrastructure is upgraded to 4G, sales of the 4G models, at higher price points, will once again change the sales mix. This mix would have a positive margin impact.
    9. We don't know all the variables, so it seems prudent to trust the guidance we receive from those closest to the issues, the company.
    10. Apple bought Anobit, last year, giving them leverage in the memory market, plus 100+ engineers.
    28 May 2013, 02:12 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
    "Analysts" whine about cheaper products to gain market share, then they whine about margins. Can't wait for AAPL to release something new so the "analysts" have something new to whine about.
    28 May 2013, 02:22 PM Reply Like
  • bjnflicks
    , contributor
    Comments (1976) | Send Message
    This is nonsense, and here is why. The Market is giving Samsung full credit for numbers of smart phones sold, not mentioning that they make very little profit on most of them. The criticism is that Apple doesn't make a budget smart phone. And that they can't be dominant in China unless they do. Well guess what, Apple is doing it, they are ramping up a cheaper smart phone, but the profit margins will be almost as good, and still much better than its competitors. Apple basically can't win with the market these days. The negative sentiment is ridiculous and non-sensical and believe me, Samsung, Google and Microsoft combined would love to trade places with Apple. It is better than al three put together and is the cheapest major stock in the market these days, when very few stocks are cheap. Apple is also the only cheap major stock with no reason to be so cheap. Carnival Cruise is cheap for good reason. And did you see how Apple alone gets blamed for tax "evasion". Google is an even bigger tax evader, as is GE, and they all do it. SO basically Apple is getting blamed for everything these days, and so remains the best buy in the market by far. I see no other major stocks anywhere near the bargain price as AAPL now. And once a single piece of good news actually is announced (Apple ahs been mum for a long time now) this stock could soar. I am talking 50% upside easily, and it would still be cheap. So why is this analyst bashing Apple at such a cheap price? Citi Bank no less which is a very questionable value in its own right.
    28 May 2013, 04:49 PM Reply Like
  • imac007
    , contributor
    Comments (441) | Send Message
    Here is a good link backing up the first part of what you are saying.

    29 May 2013, 04:25 PM Reply Like
  • deercreekvols
    , contributor
    Comments (5154) | Send Message
    There is nothing that says SA has to pick up these comments from analysts and stick them in Market Currents.


    If an analyst makes a call in their office and there is nobody there to hear it, do they make any sound at all?
    28 May 2013, 07:01 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (782) | Send Message
    Remember that Glen Young of Citi is the same "analyst" who 5 weeks before cutting Apple to a Neutral in December initiated it as a Buy with an $850 price target. Yeah... he's on top of his game. Throw enough darts you are bound to get something right.
    28 May 2013, 08:37 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4560) | Send Message
    More like he set up his short position and added fuel to the fire..


    Some of this is borderline criminal.....


    Long AAPL
    28 May 2013, 09:32 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio: