Apple's (AAPL) fiscal third quarter earnings are due out Tuesday, July 21, and once again the Street is focused on the big numbers -- revenues, earnings and units sold for the Mac, iPhone and iPod.
But savvy analysts will be paying closer attention to the number that is the best measure of a firm's profitibilty: gross margin, expressed as the ratio of profits to revenues. Or
(Revenue - Cost of sales) / Revenue
Apple's gross margins, which have averaged 34.8% over the past eight quarters, are the envy of the industry. Dell's (DELL) first quarter GM, by contrast, was 17.6% and the company warned Wall Street last week that it is expecting a "modest decline" next quarter.
In its April earnings call, Apple low-balled its guidance numbers as usual, forecasting a sharp drop in gross margins over the next 6 months. Specifically, it warned analysts to expect no better than 33% in Q3 and "about 30%" in Q4.
But Turley Muller, for one, doesn't buy those numbers, and he should know.
By Yi-Wyn Yen
You know it's a bad quarter when the most encouraging news you offer is job cuts.
During Yahoo's third quarter earnings call Tuesday, chief executive Jerry Yang made an unconvincing argument that the company is "well positioned for future growth." Yahoo reported net sales and earnings for the third quarter that fell well below the Street's consensus.
And Yahoo (YHOO) is bracing itself for a bleak fourth quarter. The company adjusted MOREyiwyn - Oct 21, 2008 9:12 PM ET
Apple is set to release its second-quarter earnings on Wednesday, and by coincidence its shares closed on Friday at just over $161 -- almost exactly where they stood three months earlier, before Apple's first-quarter earnings report.
Although the company in January posted the best earnings in its 32-year history, the Q1 report is remembered by investors as a disaster. In the weeks that followed, Apple (AAPL) shares fell more than 40 MOREPhilip Elmer-DeWitt - Apr 21, 2008 7:00 AM ET
In terms of relations with its users and business partners, the quarter that ended Sept. 30 wasn't a particularly easy one for Apple (AAPL). There were complaints and lawsuits about the cost of replacing the iPhone's battery, the surprise $200 price cut, and the software update that "bricked" untold numbers of unlocked phones. Negotiations with Hollywood and the European iPhone partners were awkward and protracted and in the case MOREPhilip Elmer-DeWitt - Oct 21, 2007 12:29 PM ET
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