Memory Chips Are Squeezing Apple. Did a Device Price Change?

Apple cleared the market’s profit and sales bar and still warned that margins will be thinner. CNBC reported Tuesday, Nov. 3, that earnings were $2.10 a share against a $1.99 estimate, and revenue was $114.48 billion against $113.39 billion. The stake for buyers is the outlook, not that beat. Apple forecast a gross margin of 45 to 46 percent, a band CNBC said it last used almost four years ago, because of a global memory-chip crunch. iPad sales missed estimates, though no dollar gap was published.

Shares were about 4 percent lower in premarket trading. A lower margin means costs, especially memory chips, are taking a larger share of each sales dollar. That can hit Apple and its suppliers first. It could eventually show up in a device price if the shortage persists, but no iPhone or other retail price change was announced Tuesday. Chief executive John Ternus’s confident comment on the call was not a price commitment.

Did Apple’s margin outlook change the price of a device on Tuesday? No device-price change was announced. The new facts are a 45 to 46 percent margin forecast tied to memory chips, a quarterly sales beat, and a weaker iPad result.