Peak Apple: Yet ANOTHER supplier reports drop in demand A key Apple supplier has hinted that its revenue from Cupertino has plummeted in recent months. Laird Plc, which makes heat-control components and electromagnetic shielding for use in wireless devices, said revenue from its "largest customer" fell 17 per cent in the first quarter of this year compared to the same period in …
.............when Cupertino faced serious competition in the high end of the mobile market, life would get more difficult for them. I do not understand why this attracts such amazed headlines - its markets-101. More competition, life gets harder. Does this mean that Apple are suddenly going to stop earning serious money? No, of course not. They have simply begun to lose their market dominance - an entirely natural progression. A development which even the most die-hard iFanboi ought to welcome for reasons that ought to be too obvious to have to explain.
By 17%? Not a chance. Especially as most Asian exchange rates are pegged to the dollar. And commodity prices have been going one way in the past couple of years (and it ain't down). Also, they said revenue from their largest customer had gone down, not profit. These terms, in accounting parlance, are quite different:
Revenue is how much you've made from a customer. E.G: I sold Apple $500 million worth of stuff
Profit is how much you made from your revenue: E.g. After costs, I made $150 million of profit of my sales to Apple.
They're saying revenue is down, not profit. This means that either Apple has reduced the price they're paying by 17% (don't believe that for a second), they've bought 17% less stuff or some combination of the two.
Also, companies making large purchases in foreign currency fill usually go to a bank and sign an agreement to buy x amount of currency y with currency z at a point in the future (this is called a Forward), so currency fluctuations usually don't affect this kind of thing.
So no, it's not price fluctuations, it's almost certainly that they're buying less stuff.
"They're saying revenue is down, not profit. This means that either Apple has reduced the price they're paying by 17% (don't believe that for a second), they've bought 17% less stuff or some combination of the two."
Apple could be paying less, exchange rates could have moved against them, Apple could be buying from another supplier, they could have lost one or more other customers - many, many reasons. But it gets page impressions to blame it on Apple.
If this were due to Apple (assumption 1) it could be due to them having over-purchased in a previous period, exchange rate movements, Apple using other suppliers for some of the supply, Apple negotiating better prices etc. etc. Perhaps we should focus on what we do know - i.e. that Apple shifted more product than 12 months ago - so if the suppliers are seeing a drop maybe, just maybe it's not all doom and gloom at Apple?
The key word here is REVENUE; not orders, not units. It's a well known fact that per-unit revenue for mass-produced products reduces hugely as time goes on. Also, the customers (possibly Apple in this case) apply pressure for lower and lower pricing whenever a procurement deal is in the offing. Plus, they may be buying from Laird's competitors.
Talk about trying to find a story where there isn't one! It's like CNN in Boston all again.
Of course Apple is in trouble. They haven't released anything truly "new" in the last four years.
They've shot themselves in the foot with their only supplier of screens, memory and microprocessors - Samsung won't deal with them directly any more. They've had to source components on the open Asian markets, and have lost their "favoured customer" status with all the component brokerages. Their component prices have multiplied recently (nearly 400% up).
They've even upset their principal manufacturer Foxconn by trying to force down factory prices so Foxconn just changed their lines to making generic PCs for more profit! The prices to Apple ROSE by over 300%....
Their only hope is to carry on their spurious litigation against the whole of the rest of the computing world - they've patented rounded rectangles and multiple touch. They'll just have to buy "friendly" judges as usual and flood the legal system with these bizarre claims. Microsoft will be in trouble over the "touch" content of Windows 8....
If that is a definition of Apple in trouble - the others (who have just copied Apple) are in even worse shape and face more competition at the lower profit end of the market with near zero loyalty from customers. People may be loyal to Android - not to HTC or Samsung or ??
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