Apple 10-K Filing Warns of Lower Margins

Apple’s just filed 10-K report with the Securities and Exchange Commission revealed the company is expecting to see lower gross margins in the coming months thanks to new product launches and increasing component costs.

“The company expects its gross margin percentage to decrease in future periods compared to levels achieved during 2010 and anticipates gross margin levels of about 36 percent in the first quarter of 2011,” the report said. “This expected decline is largely due to a higher mix of new and innovative products that have higher cost structures and deliver greater value to customers, and expected and potential future component cost and other cost increases.”

Expecting lower margins doesn’t, however, mean Apple is expecting to see lower sales. The company’s Mac lineup has seen climbing sales along with iPhone and iPad sales, and those numbers are likely to continue going up.

Apple also warned that obtaining the components it needs to build products could potentially be at risk.

“The company has entered into certain agreements for the supply of key components including but not limited to microprocessors, NAND flash memory, DRAM and LCDs at favorable pricing, but there is no guarantee the Company will be able to extend or renew these agreements on similar favorable terms, or at all, upon expiration or otherwise obtain favorable pricing in the future,” the report said. “Therefore, the company remains subject to significant risks of supply shortages and/or price increases that can materially adversely affect its financial condition and operating results.”

Apple’s research and development costs were up in 2010 to US$1.8 billion. In comparison, the company spent $1.3 billion in 2009, and $1.1 billion in 2008.

Advertising costs for fiscal 2010 came in at $691 million thanks to an agressive string of Get a Mac ads, iPhone and iPod touch commercials, and iPad ads.

Apple’s stock closed on Wednesday at $307.83, and is down to $307.80 (-0.01%) in pre-market trading.