June 8, 2012
The following video is part of our "Motley Fool Conversations" series, in which chief technology officer Jeremy Phillips and senior technology analyst Eric Bleeker discuss topics across the investing world.
You don't become the largest company in the world riding a wave of bad news. In Apple's case, it's been riding a winning streak that now spans more than a decade. However, if there's one concern surrounding the company, it's that carrier subsidies could derail iPhone sales and put a stop to the company's growth. That's a concern that's kept Apple at a below-market P/E in spite of its enormous growth rates. Two pieces of recent news point to Apple continuing to expand on its iPhone fortunes. First off, the iPhone is coming to Virgin Mobile. Expanding to prepaids is a nice new form of distribution on its own. However, this will also give investors a better feel of users' willingness to pay more for an iPhone without the subsidies larger carriers offer. Another piece of good news is recent surveys showing users increasingly gravitating to the iPhone 4S. Especially when users move up to the models with more storage space, that's the most high-margin phone Apple offers and this continues one of the hidden storylines driving the company's surge in profitability: ever-increasing margins. To see Eric's and Jeremy's full thoughts, watch the video below.
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