By Philip Elmer-DeWitt
October 29, 2012

FORTUNE — One of the numbers analysts watch closely when a company reports quarterly earnings is its total gross margin. It’s usually expressed as a ratio:

GM% = (total revenue – cost of goods) / total revenue

Gross margin can be thought of as a measure of how efficiently a company turns sales into profits.

In Apple’s (AAPL) case, gross margins (according to‘s records) have been rising fairly steadily, from 28.5% in Q1 2005 to a record 47.4% in Q2 2012 — an astonishingly high ratio for any company, especially a hardware manufacturer.

Which is one of the reasons the market reacted so badly when Apple reported its earnings last Thursday. Although gross margin for Q4 2012 came in above guidance — 40% vs. 38.5% — the company warned analysts that its GM% for the December quarter would be considerably lower: 36%.

The last time Apple reported a gross margin that low was 2008.

One of the analysts who expressed disappointment last week was Deutsche Bank’s Chris Whitmore. But he’s had the weekend to think about it, and in a note to clients Monday titled “We’ve seen this Apple margin story before” he offers some perspective.

“There is a striking parallel between Apple’s margin outlook for the iPhone 5 ramp and the prior iPhone 4 cycle, which was the last complete iPhone overhaul (i.e., form factor and manufacturing process),” he writes. “Apple’s overall margins (and our estimate for iPhone margins) stepped down momentarily after the launch of iPhone 4 until reaching new highs ~4 quarters following its release. We suspect a similar margin dynamic will evolve for iPhone 5 as it ramps to full volume production over the next 3-6 months.”

Whitmore estimates that within two quarters Apple will have recovered roughly half of the drop in gross margin associated with the iPhone 5.

“We believe near-term margin concern is overblown,” he concludes, “and is creating a very attractive entry point for AAPL shares. Reiterate Buy.”

UPDATE: Asymco‘s Horace Dediu addressed the drop in iPhone margins in even more detail Monday.

“The iPhone is a profit monster,” he writes, “but when it launches there are many costs associated with it: components tend to be more expensive, there are more warranty returns, there are higher shipping costs are units are shipped in smaller lots to more points of sale…

“There is an asymptotic limit to margins as they cannot grow higher than whatever the iPhone yields but that’s not yet in sight. The upper bound is probably in the 50% range.”

You can read Dediu’s piece here. His chart, below, goes back to calendar Q4 2005:

You May Like