Apple Inc. (AAPL)’s Gross Margins Will Be Better Than Expected: Steven Milunovich

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Apple Inc. (NASDAQ:AAPL) is going to announce its third quarter earnings on Tuesday. Analysts and investors are all beefed up to hear from the world’s most valuable publicly traded company: Apple (NASDAQ: AAPL). The company will be sharing its third-quarter results after market close. Discussing this in a program on CNBC, Steven Milunovich of UBS said that experts have high expectations from Apple in terms of gross margins and profits because of huge potential in the upcoming iPhone 6 and iPad line.

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Experts are also expecting huge profits from the new product line of Apple Inc. (NASDAQ:AAPL), the iWatch. Milunovich thinks that most of the Apple Inc. (NASDAQ:AAPL) phone customers are waiting for the iPhone 6 launch because of its bigger screen size. He said:

 “First of all, the iPhone 6 is going to appeal to a lot more people. Arguably, a third of the market Apple can’t get through right now because it doesn’t have larger screen phones, and in our survey today, it does appear more people than normal are holding back waiting for that product. Second is, you will have a new product category with the iWatch. Now we are relatively conservative in our forecast there because we think everybody needs a phone [and]not everybody is going to want to wear a watch on their wrist. Nevertheless, we expect it’s going to be very additive to the earnings with 40% or better gross margin. Finally, there’s potential for new services. Apple Inc. (NASDAQ:AAPL)’s sort of been thinking about new services for a while. We’re not sure when they come, but between a new iPhone 6, new products, we think this time’s a bit different.”

Steven Milunovich also said that Apple Inc. (NASDAQ:AAPL) will experience a depletion in its expenses like higher warranty expense, high fixed-cost absorption by the next year.

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