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Here's why: The iEmpire made $549 per handset sold in Apple's fiscal third quarter, with Ma Bell apparently covering $300 of that tab via subsidies.
Think Verizon (NYSE: VZ ) and Sprint Nextel (NYSE: S ) would offer that much? Perhaps. But don't expect Apple to change anything until another carrier agrees to equally or more generous terms. The iPhone business is simply too profitable.
Brrrrring! Margins calling!
Call it the golden delicious unit in a tasty bushel. Apple's fiscal third-quarter revenue grew 12% over last year's haul, and per-share profit improved 13%, reflecting a higher gross margin. (It rose more than 140 basis points to 36.3%, year over year.) Both figures easily bested the Street's consensus estimates.
But Apple's overall margin expansion impresses me most. Why? Look at the Mac business. Unit sales improved 4%, but revenue fell 8% thanks to a flood of super-cheap netbooks from Dell (Nasdaq: DELL ) , Hewlett-Packard (NYSE: HPQ ) , and Asian suppliers. No margin expansion there. Margin contraction, perhaps.
That means the iPhone did virtually all of the heavy lifting. Researcher iSuppli recently found that each unit of the device's latest 3G edition costs roughly $179 to make. Apple appears to be realizing at least a 50% gross margin on every iPhone sale.
And it's transforming the mobile phone industry as a result. Apple and Research In Motion (Nasdaq: RIMM ) , another high-margin smartphone supplier, took home a whopping 35% of the market's operating profits last year, despite accounting for just 3% of devices sold, Deutsche Bank analyst Brian Modoff estimates.
The iPhone Empire seems on a similar path for 2009. Love her or loathe her, Ma Bell is providing a boost.
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