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Technology Stocks : Apple Inc.

AAPL 259.35

+0.1%

Jan 9 3:59 PM EST

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To: Road Walker who wrote (143598)	10/26/2012 1:13:49 PM
From: Doren	Read Replies (1) of 213181

Message # 143602 from Guth at 10/26/2012 9:51:08 AM Last year's FQ1 GM was ~43%. No way this year was going to come close to that, but it will be better than 36%. That profit margin thing has me interested too. Message #143609 from John Koligman at 10/26/2012 11:52:13 AM Apple did this with the original iPhone, you will recall—pricing it at a positively usurious price in the early going, and then rapidly cutting that price when its supply chain and carrier networks ramped up. And the strategy certainly paid off then. So Apple does run the risk that it will alienate some potential customers, cannibalize sales of the bigger iPads, and lose some gound in the platform market-share war. I have a suspicion that because Apple knows their supplies are going to be constrained, they are putting a tax on early adopters. I'm guessing that means that they think supplies are going to be constrained up to xmas. They'd also like to sell more full sized pads obviously, so they are making those more cost effective vs the smaller pad which hurts their cash flow. I'm also guessing that they will lower prices after xmas to stimulate demand. Another guess: the massive growth of touch screens is putting a strain on the supplies world wide. Apple may not have been able to cut the kind of deals they have previously. They may also be factoring in the fact that they no longer can cut those kinds of deals unilaterally as smaller vendors wither and die and the huge vendors play the same game Apple has been playing. They probably have the power to cut a lot of deals just not every deal. Another track: Apple may have come to the conclusion that they can no longer charge such large premiums. As products become more generic they may have to rely more on cash flow rather than profit margin. So they may start to cut prices to more competitive levels. It would be interesting to be a fly on the wall.

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