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When Will Declining Product Margins Become a Concern for Investors in AAPL?

|Includes: Apple Inc. (AAPL)

Apple (AAPL – $348.48) reports Q1 earnings today.  Anything less than $6.00 will likely be a disappointment.  We’re at $6.15 which implies +67% revenue growth, 49 Bps of R&D leverage, 135 Bps of SG&A leverage and a -24.0% tax rate (consensus = $5.39). 

That said, we’re forecasting a -350 Bps GPM% decline versus LY.  When will the GPM% declines matter?

Also, take a look at our AAPL Data Packet (see here).  It’s worth noting that each operating segment (Americas, Europe, Japan, Asia-Pacific, Retail) reported an EBIT margin decline in Q4 2009 (September 2010).     

There are issues worth thinking about beyond Mr. Jobs and his medical leave. 

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.