Apple’s shares surged in high-volume trading Tuesday after a so-called tear-down analysis of the iPhone estimated that the iconic tech company will reap a gross profit margin in excess of 55 percent from its new product.
Apple shares gained $5.91, or 4.9 percent, to $127.17 in a half-day trading session in advance of today's Fourth of July holiday. In the past 12-months, the stock has traded between $50.16 and $127.61, rising this year by almost 50 percent, after the pre-launch announcement by co-founder Steve Jobs last January of the planned debut of the hybrid mobile phone, media player and wireless web product.
On Tuesday, the research company iSuppli said that its tear-down analysis of the iPhone showed its bill of materials and manufacturing costs totaled $265.83. That means Apple would generate a margin of more than 55 percent for every 8 gigabyte iPhone it sold for $599.
Like the iPod music player, all the manufacturing is outsourced to Asia and most of the part will likely also be of Asian origin.
Eric Pratt, iSuppli’s senior director of tear-down, is reported as saying that iSuppli is still fine-tuning its report and it now thinks the product’s margin is more than 50 percent, when accounting for factors like royalties and software costs. He wasn’t surprised by the margin, he said, because the company’s earlier research-based modeling called for a basic iPhone cost of $264.85.
Estimates of units sold in the US since last Friday's launch are in the range from 500,000 to 750,000.
Apple has an annual target of 10 million. It has sold more than 100 million units of the IPod music player since its launch in 2001.
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