Turley Muller on iPhone Profitability

Turley Muller, whose track record on Apple financials has been remarkably accurate in recent quarters, shows why he believes that (a) Apple generated $2 billion in profit on iPhone sales last quarter (suggesting that Strategy Analytics’s $1.6B estimate was low), and (b) Apple’s profit margins on iPhones are around 60 percent.

In short: Apple CFO Peter Oppenheimer implicitly revealed during the most recent finance call that the average selling price for an iPhone during the quarter was about $610. If Apple can sell iPod Touches for $199, the cost of goods for an iPhone 3GS is probably around $250. That’s right in line with other savvy Apple analysts’ estimate of around $350 average margin (pre-tax) per iPhone. Give or take $10 or $20 here or there and it doesn’t make much difference: you multiply that by 7.4 million iPhones and you get a lot of fucking money.

Seriously, just look at these numbers from Muller.

★ Monday, 16 November 2009