August 20th, 2007
PC component prices on the upswing
When Apple reported its most recent quarter it toned down its outlook based on an expected rise in component prices.
Apparently that expected rise is right on schedule.
In a research note on Monday, Pacific Crest Securities analyst Andy Hargreaves outlined the following price increases:
- In July, 2GB, 4GB and 8GB flash spot prices rose about $2.92, $3.29 and $1.17 respectively. This jump is expected to crimp iPod and iPhone profit margins.
- LCD panel prices increase 8 percent in July. This is expected to ding Mac profit margins.
He also noted that the component price increases are expected and that Apple should be able to offset them with strong demand.
But why just focus on Apple? Both HP and Dell have benefited from component costs. As these costs increase profit margins could slip. But if things go as planned and second half boost in demand should allay any worries.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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