Apple stock dips on iPhone price cut

By Colleen Taylor, Contributing Editor -- Electronic News, 9/6/2007

Shares of consumer electronics superstar Apple Inc. took a dip late Wednesday after the company announced a $200 price cut on its 8-gigabyte iPhone mobile handset, which will now retail at $399. The company also said it will discontinue the 4-gigabyte model, which debuted in June with a $499 price tag.

After the announcement, Apple's stock price closed Wednesday at $136.76, down 6.1 percent from the day's opening price of $144.97. At 12:45 p.m. ET, the company's shares were selling at $134.89.

But despite some investors' obvious trepidation on the iPhone price cut, some analysts remain confident on Apple's prospects to continue raking in substantial income. Market research firm iSuppli Corp. said Wednesday in a research note that the firm's teardown research "indicates that Apple was generating a robust hardware margin at its previous pricing, and will still be profitable at the new pricing." In July, iSuppli said that the 8-gigabyte version of the iPhone had a total hardware bill of materials and manufacturing cost of $265.83, generating a margin in excess of 55 percent on each iPhone sold at the then-$599 retail price.

"Apple's price cut on the 8-gigabyte version of the iPhone will help Apple maintain its market leadership in smart phone and feature phone sales in the United States," the firm noted.

Also Wednesday, Apple introduced several new additions to its immensely popular iPod product lines. The company debuted an all-new version of its iPod nano, with video playback and a larger, higher-resolution two-inch display, which will be sold in 4-gigabyte and 8-gigabyte versions for $149 and $199, respectively. The company also introduced a new iPod classic, in 80-gigabyte or 160-gigabyte versions, priced at $249 and $349, respectively. In addition, Apple introduced the new "iPod touch" which features a touch-screen interface similar to the iPhone's, as well as Wi-Fi wireless networking, an iPod first. The 8-mm thick iPod touch has a starting price of $299 for an 8-gigabyte model; a 16-gigabyte model is priced at $399.