Margin Call

Horace Dediu, on Apple’s drop in margin last quarter:

Relative to adjusted 4th quarter 2011 Sales increased by 27% while Cost of Sales increased by 30.5%. Margins shrank in late 2012 because the products were more expensive to make.

It’s simple arithmetic.

We can at a glance see that the cost of sales increased as a proportion of sales. Therefore the margin decreased as a percent of sales. The cause is higher costs, not lower pricing.

Or lower demand, which many people apparently still think is Apple’s problem.

Wednesday, 6 February 2013