Daniel Del'Re
SAN FRANCISCO -- Apple (AAPL Quote - Cramer on AAPL - Stock Picks) appears poised to solidify its reputation as today's growth stock par excellence as it finds new ways of boosting its profit margins.
For two of its hottest products, the iPhone and revamped iPod nano, Apple has taken the economic upper hand over component suppliers and partners, adding even more heft to its already eye-popping profitability. The company has cut 18.5% from the cost of hardware in its new 4-gigabyte nano by using new parts, according to data tracker iSuppli. Apple now pays about $58.85 for the device's innards, says iSuppli, and charges $149 for the finished product, which went on sale shortly after its Sept. 5 debut. The new iPod nano comes with a wider screen and dramatically improved picture quality for viewing videos, but it costs as much as the older model. Even so, Apple is still exceeding its tradition of charging twice the cost of the underlying hardware, says iSuppli. "Apple does a good job of making their old products obsolete while adding enough new features so that people feel good about upgrading to the latest version of their products," says Kirk Kim, a portfolio manager at Transamerica. "And they do it in a way that gives you more for the same price." Transamerica holds almost 5.5 million Apple shares, according to its latest securities filing.
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