Apple Expected to Absorb Higher iPhone 5 Quality Control Costs

Analyst Shaw Wu expects "vintage conservative" guidance from Apple ahead of their quarterly earnings report this Thursday. While he still expects Apple to have a big holiday quarter, he believes that Apple will partially absorb quality control costs associated with the iPhone 5.

This news follows Foxconn's own claims that the iPhone 5 is such a hard device to assemble.


Beyond the iPhone 5, Wu believes that Apple's margins will also be pushed lower by the anticipated launch of a smaller 7.85-inch iPad. He expects Apple will sell its so-called "iPad mini" at lower margins than the full-size iPad, at least initially, allowing the company to achieve a lower price point and take on competitors like the Amazon Kindle Fire HD and Google Nexus 7

Wu expects Apple to sell 25-26 million iPhones, 16.5 million iPads, and 4.8 million Macs. Wu believes Apple's near-term gross margins will be between 40.5 percent and 41.5 percent, slightly lower than Wallstreet's estimate.

via AppleInsider