Here is your daily Apple Inc. (NASDAQ: AAPL) stock news and rumors report for Oct. 28, 2010. Both good and bad financial news from Steve Jobs’ camp today, as annual filings of SEC 10-K forms reveal record ad spending outstripped by record revenue, but Apple also prepares investors for decreased margins due to high production costs. Meanwhile, Apple takes on the Android Market by hosting a three-day event for the company’s engineers to help iOS app developers improve the App Store.
Apple Sales Revenue Leaps Over Ad Revenue Despite $190 Million Budget Increase: The iPad and iPhone 4 have thrived on media hype and strong word of mouth, but that doesn’t mean Apple didn’t spend big to spread the word about their new mobile products during fiscal 2010. A recently filed SEC 10-K form shows that Apple spent $691 million on advertising this year, an increase of $190 million over the company’s 2009 ad budget. TechCrunch points out that this advertising push is far and away the greatest annual increase seen from the company in years. Apple spent $467 million in 2007 when the iPhone first debuted, $486 million in 2008, and $501 million last year. Has it paid off? Put it this way: Advertising revenue has accounted for just 1% of its revenue spending thanks to the massive increases in sales of Apple’s complete product line.
iPad, MacBook Air to Bring Down Gross Margins, Apple Says: Revenue may be high, but Apple is still warning its investors to brace for decreased margins next year due to the high cost of introducing new products to the market, such as the iPad tablet and the MacBook Air line of laptops debuted this month. Apple filed its annual Form 10-K with the U.S. Securities and Exchange Commission and advised its investors to, “expect its gross margin percentage to decrease in future periods compared to levels achieved in 2010.” Apple is forecasting margins of 36% next year, following 2010’s decrease from 2009, dropping from 40.1% to 39.4%. The high cost of unique components for both the iPad and MacBook Air, plus competitive pricing on those devices, is responsible for the decrease, according to the filing. In the filing, Apple also said margins will not fall as much as they might have, thanks to strong iPhone sales.
iOS Developers to Join Apple for “Secret” Three-Day Summit: A rumor originating at Silicon Alley Insider says that Apple is hosting an exclusive summit for iOS developers in California next week and that the event is being kept low-profile. The purpose of the event is for Apple to directly assist app developers to improve the overall quality of the App Store in anticipation of iOS 4.2’s November launch. The rumor also says that Apple engineers will be working directly with developers on their apps, providing pointers and assistance on how to improve their software. With developers flocking to Google’s (NASDAQ: GOOG) Android, new programs from AT&T (NYSE: T) and Nokia (NYSE: NOK) to entice developers to develop Ovi apps, and mounting interest in Microsoft’s (NASDAQ: MSFT) Windows Phone 7, it wouldn’t be surprising to find Apple becoming more proactive in getting the highest quality apps on their smartphone and tablet storefronts.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
