The drop is easy to arrive at simply as the multiple of some modest lowering of Apple's expected sales growth and some modest lowering of its expected profit margin on those sales.

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Gross margin is a company's profit on sales before factoring in all costs, such as interest and taxes.

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While Apple likely makes less money on sales of older iPhone models, the profit margin is likely similar, said ISI Group analyst Brian Marshall.

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Well, if we get Apple to agree to cut their profit margin and sell the iPads at the regular price then OK, we do get 15 million sales and so on.

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