Apple Inc. could generate a gross profit margin of more than 55 percent on its 8-gigabyte iPhones, research company iSuppli reported on Tuesday.

Surrounded by cheering Apple Store employees, one of the first iPhone buyers leaves the store on Fifth Avenue in New York, June 29, 2007. (Xinhua/Reuters Photo)

According to a tear-down analysis of the iPhone, its component and manufacturing costs totalled 265.83 U.S. dollars. That means Apple would reap a profit margin in excess of 55 percent on every 8 gigabyte iPhones it sells for 599 dollars.

"It had a very good start," said Bill Choi, an analyst with Jefferies & Co. in New York. "They're selling it for a lot of money. On a gross margin basis, it is very profitable."

However, Choi said the 55 percent figure alone doesn't determine how profitable a product is. Companies also have costs from marketing and research and development.

Eric Pratt, iSuppli's senior director of tear-down, said the iPhone's margin is much higher than some smart phones, like the Motorola Q. But he expects similar margins from the new crop of smart phones, which include Nokia Corp.'s N95 and HTC Corp.'s HTC Touch.

Apple shares added 5.91 dollars, or 4.9 percent, to 127.17 dollars at 1 p.m. New York time in Nasdaq Stock Market trading. They have jumped 50 percent this year.

Apple said on Monday that the iPhone "all but sold out" its initial shipment in both Apple and AT&T (ATT) stores after just three days of sales.

Analysts estimated sales of 500,000 to 700,000 units of the combination phone, iPod and pocket Internet device by Sunday.

VietNamNet/Xinhuanet