You may have noticed that, in recent days, Apple’s stock price has resumed its upward path (except for Friday as part of an overall stock market dip). After a loss of some 20%, this is a refreshing change, at least if you care about such things, or happen to own some of their stock, or have an interest in acquiring some. Otherwise, it’s just more blabber that is probably not worth your attention.
Although I suppose Apple’s stock market price has some value, since it’s perceived to be evidence of the company’s success, or lack thereof, or a perception on the part of some on what may or may not happen.
So the stock price drop was, in part, triggered by rumors, not confirmed, that some supply chain vendors had reported cutbacks in orders from Apple. Unfortunately media and financial analysts have poor memories, and thus didn’t recall the last time this happened, in late 2012, weeks after the release of the iPhone 5s. That, by the way, was perceived as a failure by some, and its little brother, the iPhone 5c was labeled a dud. Only there’s no evidence that either failed to meet or exceed Apple’s sales expectations.
Regardless, the stock price was in the doldrums for months. Tim Cook even had to address the issue during a quarterly call with financial analysts, pointing out that a few supply chain metrics, while possibly accurate, didn’t necessarily reveal sales trends. Apple deals with lots of suppliers, and will switch orders from one to the other. There are also seasonal ordering patterns to consider, such as the obvious fact that Apple sells in lower numbers in the March quarter than the December quarter.
Now in recent days there have been a few juicy tidbits that serve as a reality check for the latest supply chain scuttlebutt. One is the report that sales of non-Android smartphones in China are way up, to the tune of 33%. Since most of those smartphones are built by Apple, you can see that stories of a sales slowdown don’t quite wash. Of course we heard this before last year during one of those occasional stock market crashes in China, when Tim Cook had to reassure the market that everything was coming up roses in that country.
That’s just one set of numbers. The other is a report of record earnings by Taiwan Semiconductor Manufacturing Co., or TSMC. This is one of the key chip fabs used by Apple to build A-9 series processors. So if sales of competing products are essentially moribund, where’s all that action coming from anyway?
Kudos to AppleInsider’s Daniel Eran Dilger for actually doing the legwork to come up with these reports. You wonder why so-called tech or mainstream reported from the big media companies aren’t publishing this information. At the very least, a story about supposed supply chain cutbacks could be balanced with reports about high sales in China, and the fact that one of Apple’s key suppliers is being kept real busy building parts. While Daniel’s sources don’t specifically say Apple, the connection is obvious.
None of this necessarily means Apple won’t issue a lower-than-expected guidance for the March quarter. But that won’t be known until later this month. Until then, it’s all speculation, or just assuming that, since other tech companies are hitting headwinds, Apple must too.
Meanwhile, as expectations for an Apple Car gain a little more momentum, you’ll no doubt continue to hear stories suggesting that Apple has no business getting into that market. After all, what does Apple know about automobiles. On the other hand, what did Elon Musk know about cars before he established Tesla? Or building rocket ships, for that matter, before SpaceX was established?
The long and short of it is that Apple can buy expertise in product segments were it doesn’t participate. Over the years Apple has acquired a number of products and companies to enhance its portfolio. Remember that Apple acquired third-party apps, and their developers, to create, for example, iTunes, Final Cut Pro and Logic. Their chip development capability came from outside acquisitions, and Apple Maps is, in part, built on technology Apple bought and paid for.
So, yes, it’s clear to me that, if Apple wants to build a car, they can definitely make it happen. They have the money to buy the talent they need, and to build test labs and manufacturing facilities. Or just lease a facility from another auto maker.
They also said Apple didn’t have a clue about smartphones when the iPhone was first announced. One of their severest critics was none other than Steve Ballmer, the former Microsoft CEO.
So confounding skeptics has been in Apple’s DNA from the very early days. Remember what they said about Macs being unsuited for serious work. And what about a graphical operating system? Real computer users worked with DOS. Macs were just fancy, overpriced toys.
And we all know how the Mac continues to outpace the PC industry in growing sales, and how the iPhone also continues to confound skeptics with its continued success. Sure, the iPhone’s rate of growth cannot continue at its current rate, but there’s no evidence Apple is going to disappoint anyone with its next earnings report. But even if the figures are favorable, the skeptics will continue to find downsides.
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