Apple's "too much to earn" dilemma

Apple has entered a "too much money" dilemma. In the last two quarters, the company’s revenue increased by 70% and 80% year-on-year, respectively, and earnings per share grew faster. Because the company has formed a huge scale in a good situation - no matter what the standard measure is called a giant company, this year's receipts are expected to exceed 100 billion US dollars - the problem it faces is not in the next few quarters Whether the increase will slow down but will slow down. The company released its latest quarterly results on Tuesday. Later, at this time, investors should pay attention to various clues to determine how the company’s management will respond to the change from “abnormal” to “excellent” growth.

Whenever a technology company slows down, unit prices become the focus of attention. Apple has maintained an extraordinary record in this regard. Last year, the iPhone, which has been listed for four years, is not considered a new product - the income of each contribution has remained stable at more than 600 US dollars. Even more remarkable is the fact that the prices of gray iPods and even personal computers (remember them?) have remained strong. How long can this situation last?

The second one that will be carefully examined is gross margin. If product prices remain stable, can Apple continue to convert the huge output into low-cost component costs to maintain the stability of gross profit margins? Under the guidance of Apple management, analysts expect that gross profit margin will slightly drop from 39% a year ago to 38%. But in the past, management had always set the tune down too low.

Apple’s iPhone and iPad sales far exceeded expectations in the quarter (Citi's research shows that the consensus of analysts is 17 million units and 7.5 million units), which will inevitably increase the gross profit margin, and the pricing issue will appear to be less important. However, sooner or later, one day, Apple's huge will surely urge the market to pay attention to some real details - the original Apple can make the product at such a low cost, can sell the product so cheap - and then only to see that growth is amazing Revenue figures.

The Lex column is a short review jointly written by FT critics and provides insightful analysis of global economics and business.