Will This Make Apple’s Stock Shine Again?

According to Huberty, the next iteration of the company’s smartphone, the iPhone 5S, will require lower planned purchases of production equipment. According to the securities filing, Apple has made a commitment of $904 million for equipment purchases, compared to the $4.5 billion it spent two quarters ago when it invested in in-cell touch displays for the iPhone 5. This massive drop points at the fact that the iPhone 5S will not require any significant hardware changes and signals higher margin yields.

In addition, while flash memory prices were sky high December, they will eventually ease, Huberty said. According to the analyst, a more favorable NAND price trend was consistent with Apple increasing memory in the 9.7-inch iPad last week. This trend will give Apple a cost advantage relative to spot prices and, in turn, help its gross margin.

Huberty also pointed out that Apple’s off balance sheet purchase commitments were not worse than seasonal figures. Purchase commitments of $19.8 billion fell 10 percent quarter-over-quarter against a five-year average of 12 percent.

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