The shift within mobility sales toward lower margin smartphones was the key driver behind declining margins.
Gross margin dropped from 45.9% to 37.8% mainly due to the lower margin sales of smartphones.
Furthermore, the Paypal division that has the most exciting growth is a lower margin business than the marketplace revenue.
This dynamic means issuers are likely eating those costs in lower margin.
The analyst said such a phone would have a lower margin than the full-priced iPhone, but above the corporate average when sold in volume.
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It could certainly afford to accept a lower margin, but would only do so if Apple executives concluded that its customers were highly price sensitive.
Likewise Digital Equipment focused on its profit margin in computer-aided design and manufacturing software only to be destroyed by its lower margin but higher volume competitor AutoCad.
The company noted pressures from precious metal and diamond costs, as gold prices have remained elevated, and a shift to higher-priced, lower margin products in their revenue mix.
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Being able to grow margins in the context of heavy discounts in Greater China and a revenue mix that shifted toward lower margin geographies is a great feat for Nike.
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Non-GAAP operating margin dropped to 29.4% for the quarter, versus 30.6% for the year-ago period, due to growth in lower margin segments such as PayPal and new acquisitions such as Milo.com.
But he says you can always accept lower margin at any product at any given time for a strategic reason, but at the background we always know that this halo effect plays.
However, news of that lower margin was one of the key reasons for the share price fall as it led investors to fear it would take even longer for the company to become profitable.
While improved pricing and lower input costs helped the bottom line, Nike saw gross margins slide 30 basis points to 42.5% as higher labor costs, currency effects, and a transition to lower margin products and businesses took a toll on profits.
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Looking ahead, the company expects to see margins contract further in the next quarter as it looks to launch a number of lower margin new products ahead of the holiday season in what is going to be the broadest product refresh cycle in its history.
Consumers have walked into the store to buy the lower-margin products and nothing else.
Instead the company focused on maintaining its market share targets with its lower-margin sales of ordinary cellphones.
But this is lower-margin business that contributed only JPY 50.3 billion in gross profits in FY 2010.
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While China and India do bring in volumes, what sells more here are the lower-priced and lower-margin products.
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The culprit was the 71% increase in lower-margin general merchandise sales, and only a 13% increase in media-related sales.
But growth in these new markets has gone hand-in-hand with a shift towards lower-margin entry-point products, the firm conceded.
And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.
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Google blamed foreign currency issues and a big move into lower-margin mobile technology.
ADP, serving 570, 000 business clients, recently streamlined, disposing of lower-margin and slower-growing units, such as a service that processes stock transactions.
In other words, Lenovo has to find other products and new markets over PCs for the highly competitive, lower-margin China market.
The additional labor has allowed him to start manufacturing some lower-margin, higher-volume orders--the kind that give him access to the biggest customers.
In particular, revenue tilted toward lower-margin video game hardware and away from Windows, where results were dragged down by weak consumer PC demand.
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Scotts had much higher revenue but a much lower profit margin, and the Hagedorn family wound up with 42% (now 31%) of the stock.
The analyst notes that his estimates remain below consensus, and assume larger smartphone losses and a lower gross margin trajectory in feature phones that most other analysts.
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ConocoPhillips is at the forefront of the debate in the oil industry, having decided to get rid of its lower-margin downstream business and concentrate on exploration and production.
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By keeping the yield curve flat, QE2 pressures banks to make more higher-return loans as investing in treasuries and short-term facilities provides a lower and lower profit margin.
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