Apple Warns on Product Profit

By Douglas A. McIntyre Published Nov 6, 6:20AM EST

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Apple Warns on Product Profit — © Apple Inc.. Paris (CC BY 2.0) by sabin paul croce

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Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) has warned that it may suffer a decline in profit, particularly on new products.
This tells investors that the recent near-record report could be a high-water mark.
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In the “risk factor” section of its annual report (10-K), Apple Inc. (NASDAQ: AAPL) said it may suffer a decline in profit, particularly on new products. Gross profits have long made Apple attractive to investors.

The report says, “New products, services and technologies may replace or supersede existing offerings and may produce lower revenues and lower profit margins.” These, in turn, could affect “business results.”

Risk factors are part of all publicly traded company major filings, especially 10-K filings. However, management includes all the hurdles a company can face. They are an early warning system that investors can ignore or not.

Apple has invested heavily in its new products, particularly artificial intelligence. In this way, it is similar to any huge tech company, all of which are in the AI race. Meta and Microsoft, in particular, said these investments would be in the billions of dollars and would push up spending.

Apple’s gross profit is near record levels. In the most recent quarter, the figure was 45%, which is relatively flat compared to the previous two quarters. However, it has grown from 40% in 2020. Apple’s risk factors tell investors that the recent level could be a high-water mark.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.