U.S. News

Apple Shares Up As Investors Warm to iPhone Margins


The most expensive iPhone model could deliver a profit margin of more than 55 percent for Apple after hardware and manufacturing costs, according to iSuppli, which examined the components of the widely anticipated device.

Apple shares rose more than 4 percent after the research firm said on Tuesday that the hardware and manufacturing cost was $265.83, or almost 45 percent of the $600 retail price for the iPhone model with eight gigabytes of storage.

ISuppli said its estimates did not include costs such as royalties and logistics. Some analysts have also speculated that AT&T , the exclusive U.S. service provider for the phone, may take a portion of the iPhone retail price for devices it sells in its stores.

According to iSuppli, the phone's display, a much lauded feature for the device, costs $27 or about 10.8 percent of the device's hardware costs. The display was supplied by Germany's Balda, iSuppli said.

The phone's core communications chips, from Infineon Technologies represents $15.25 or 6.1 percent of the cost.

The iPhone, which combines phone, music playing and Web browsing capabilities, went on sale on Friday June 29 as thousands of buyers lined up at Apple and AT&T stores.

Estimates for Friday and Saturday sales of the device ranged from 312,000 to 500,000, according to analysts contacted by Reuters. AT&T said that iPhone sales for the weekend were the strongest for any device in the company's history.

In January, iSuppli said it had estimated a $264.85 hardware and manufacturing cost for the eight-gigabyte device before the firm was able to take the phone apart to look at its components.