Apple Inc. (AAPL) Gets Aggressive

Source: SEC filings. Calendar quarters shown. Figures may not sum due to rounding.

The real question is what kind of effect this might have on gross margins.

Markup mark down
To answer that, investors need to know what’s happening with component costs. Last year, NPD DisplaySearch analyst Richard Shim estimated that the premiums that Apple was paying for Retina panels, which it sources from Samsung and LG Display Co Ltd. (ADR) (NYSE:LPL).

Source: CNET. Estimates as of May 2012.

These estimates are dated, and it’s possible that these panel premiums have declined over the past year. Apple was previously charging retail price premiums of $400 to $500 for Retina models, but some of that extra cost also went toward the new industrial redesign and manufacturing processes.

Still, the company probably has some gross margin to spare, and since Macs are now just 13% of the business, the effects shouldn’t be too detrimental. On top of that, what Apple may be sacrificing in percentage margins, it may be able to make up for in absolute dollar gross profits in the form of increased unit sales.

The article Apple Gets Aggressive originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple, Goldman Sachs, and Intel. The Motley Fool owns shares of Apple and Intel.

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