These two charts compare Apple's results with the guidance given in the previous quarter, for revenue and gross margin.
The cyclicality of Apple's business is obvious: product launches mean higher revenue but lower margins. The December 2012 quarter, in which Apple expected 80% of the revenue to come from new products, sees this effect become especially strong. New products cost more to make, as the supply chain goes through a learning process and efficiencies have yet to be fully worked out. There is also an impact from deferred revenue recognition: for some products, the costs are recognised up front but some revenue is spread over the product's life, pushing margin down in high-growth period.
- A shift to a semi-annual release cycle might smooth some of this out, the impact on margins depending on the degree to which the cost cycle is driven by ramping production up to meet demand surges (which would be mitigated) versus the cost of retooling for new product designs (which might not)
- Apple has started hitting guidance as opposed to beating it. Now, is that good or bad?
(This is an extract from a quarterly report I published for clients of Enders Analysis)