Originally Posted by island hermit
.7% yoy ... which is plenty when you also consider that margins dropped last year as well.
The question becomes... "when will margins hold steady or rise?".
As I said... to Wall Street, Apple is all about margins.
OK, "to wall street" maybe that's true to a degree.
But honestly, on sales in the $10s of billions, a .7% YoY margin swing is not remotely considered a price mover. Plenty of other concepts are in play here. Especially when they improved by a similar amount (.9%) over the previous quarter (which already answers your question, "when will margins hold steady or rise?" They just rose .9% QoQ). I could check to see if that is a trend over multiple quarters, but those micro-movements are probably not as important as you're making them out to be.
Down .7% YoY, up .9% QoQ (they came in at a 37% margin the previous quarter).... that says, "they are sustaining margins" to me (yeah, I still need my glasses, sadly). Small shifts are not the issue at all. The swing from 40% to 37% (Q4 '12 ~ Q4 '13) was probably more meaningful, but easily explained, as sustaining those kinds of margins (40% and above) is frankly unrealistic and dangerous over a longer term. It prevents managed shifts in pricing and supply to remain competitive. Especially in a market where you are pretty much the only company earning a significant slice of the overall pie. And, most of that movement happened in one quarter the year before, not over time as a rapidly declining trend. No, Apple still enjoys record quarters in all metrics pretty much across the board...
So, regardless of what "wall street" obsesses on in the immediate, I disagree that "it's all about margins", just like I disagree that "it's all about growth potential"... those alone aren't what give the stock its fundamental value.
Looking at the bigger picture, Apple stock should be doing fine, so I suspect it will be back up in pretty short order here. Watch the next few hours and days. I may be golden or I may eat crow. We'll see! :D