Earnings call takeaway: New products in September
Apple posted record earnings yesterday, yet the stock still dropped amid concerns over Steve Jobs' health (I'll refrain from speculating because I find it tasteless and it's none of my business) and lower projected gross margins for the September quarter (Q4). Although Apple is famous for under-promising/over-delivering, especially when it comes to projected sales and gross margin performance, during yesterday's call, CFO Peter Oppenheimer offered up a very interesting explanation for Apple's lower estimates: new products!
Although Apple historically has a lower gross margins in the September quarter because of the Back-to-School promotion, Apple also added that a "new product that [it] [couldn't] discuss" would also result in lower gross-margins. Throughout the call, Oppenheimer kept throwing out phrases like "product transition," "new additions to the product line" and a little mantra that went something like, "Apple makes state of the art new products that the competition just can't match. When we do that earlier in an introduction, costs are higher."
We had a good time speculating what new products/changes to the product line will appear in September (or in the 4th quarter, more accurately) in the liveblog and the press has joined in that speculation today. ZDNet thinks that products will be brought out at lower prices, so that Apple can drive volume and gain marketshare. Over at eWeek, they are guessing everything from a shift in microprocessors, to low-cost portables aimed at schools to revamped AppleTVs.
The general thought (or wish) in our chat last night centered around new MacBook Pros, lower priced Airs and revamped Minis or other headless Macs.
My personal speculation is that while I expect current line products to drop in price a bit (not a huge drop, but a drop), and think it is high time for a MacBook Pro redesign, I'm going to guess that new displays are part of the "transition." The Apple Cinema Display line is not only overpriced, it is long-in-the-tooth when compared to products in its pricepoint (or even lower pricepoints). OLED displays could be expensive, and it would certainly be technology that no one else is pushing.
For me, the key to Oppenheimer's words wasn't just the talk of lower gross margins -- because that doesn't necessarily mean lower prices -- it was all the talk of "state of the art products that the competition just can't match." That signifies something that the competition (presumably, HP and Dell) isn't already selling a product or technology that Apple is looking at introducing. With the number of patents Apple has, there is plenty of room for speculation.
What are your best (or most outrageous) guesses? Leave them in the comments and we'll all see how wrong (or right) we are in September.
