Why the next iPhone could help Apple recover its margins

Apple iPhone 5S

By now we’re all familiar with the main reason Apple (AAPL) shares have tanked over the past few months: Investors are worried that the company’s growth has stalled and that its margins have already passed their peak and are headed for a long decline. However, AppleInsider points us to a new research note from Morgan Stanley analyst Katy Huberty, who says that Apple’s gross margins should recover later this year after the company launches its next iPhone.

Huberty reasons that Apple’s recent margins have taken a hit after the company spent around  $4.5 billion to purchase new hardware for the iPhone 5 and its larger display. Now that Apple has gotten a knack for building the bigger iPhone — and especially now that manufacturers have been producing higher yields for the device — Huberty thinks the company will spend significantly less on components for the so-called iPhone 5S that the company is rumored to be launching this June.

Despite this, Huberty still doesn’t see Apple returning to the glory days of 2012 when its margins peaked at almost 44%. Rather, she and Morgan Stanley project Apple will post margins of 38.7% for 2013.

Source:
AppleInsider
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