Apple posted huge numbers again, but the gross margin is truly astonishing:

MG Siegler via Techcrunch

[…] the most amazing number from Apple’s Q2 was 47.4. That was their gross margin for the quarter. It’s hard to describe how ridiculous that number is, but I’ll try.

In Q1 — again, the Godzilla quarter — Apple’s gross margin was 44.7 percent. It was so high that Apple CFO Peter Oppenheimer noted during the earnings call that the company didn’t expect to match such lofty levels ever again. Instead, they destroyed the number in Q2.

Why?

It was mainly because the iPhone made up an even larger percentage of overall revenue in Q2. The iPhone is Apple’s biggest money-maker and their product with the best margins, thanks largely to carrier subsidies (though more in the U.S. than other countries). The iPad also has great margins, but they’re significantly less (the iPad is not carrier subsidized anywhere). Less iPad sales (both in quantity and percentage-wise) and strong iPhone sales meant a higher margin. That’s why Apple’s revenue dipping $8 billion only equated to profit dipping less than $2 billion.

For some other margin context, look at this chart that Horace Dediu of Asymco put together. For the first time, Apple’s operating margin (different than gross margin, but just as important) surpassed that of both Google and even Microsoft. Apple is predominantly a hardware company. Google is predominantly an advertising company. Microsoft is predominantly a software company. This is not supposed to happen.

Going forward, those margin numbers almost have to drop. Not only will the iPad sales be big this quarter (again, the first full quarter the new iPad is on sale), but the $399 iPad 2 is apparently selling very well. That will drag margins down (but likely drive revenues up and make Apple less of an iPhone company).

Apple stock rose 9% on this news.

26 April 2012 2