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iPhone X, [FLOW] Clear..What could Apple do with its $250 billion in cashflow? The imagination of Internet users is limitless... [Sale]Why iPhone X Is Apple Investors' Worst Nightmare Come True–Is the iPhone X a disappointment? Investors think so
FINANCE - There are problems of rich, very rich, and Apple's problems. The success of the inventor of the iPhone has made it possible for the group to sit on a mountain of more than $250 billion in cash. But his problem now is knowing what to do with it.
According to its quarterly results released on Tuesday, May 2, Apple had 258.8 billion available cash as of March 31,2010, the vast majority of which was stored abroad. This is equivalent to the Gross Domestic Product of a country like Chile.
Such means would enable it to buy many of its competitors or even diversify into other sectors such as electric cars, a product to which it attaches great interest, for example by buying Tesla.
Surprised by the huge amount of its reserves, the imagination of Internet users was immediately overwhelmed, transforming Twitter into a more or less zany idea box.
Shares of Apple and its suppliers tumbled this week after multiple industry analysts predicted weak demand for the new flagship iPhone. Apple's (AAPL) stock slid by as much as 4% in premarket trading Tuesday.
The radically redesigned iPhone X was supposed to give Apple a boost following a couple years of sinking sales. Early sales reports were positive, and Morgan Stanley reported last week that the iPhone X is especially hot in China.
But the first wave of demand among Apple fanatics seems to have passed, and analysts are skeptical that more casual iPhone customers will upgrade to the iPhone X.
Citing the iPhone X's super-high $1,000 price and confusing features, a Sinolink Securities analyst predicted that Apple will ship just 35 million iPhone X devices in the first three months of 2018, roughly 10 million fewer than previously expected. JL Warren Capital now estimates Apple will deliver just 25 million iPhone Xs. Jefferies is slightly more bullish, expecting Apple to ship 40 million.
The analyst reports come after Taiwanese newspaper Economic Daily reported Monday that Apple had dramatically lowered its own iPhone sales expectations from 50 million to 30 million.
Apple didn't immediately respond to CNNMoney's request for comment.
Investors punished companies that make iPhone components. Shares Genius Electronic Optical, which makes of iPhone lens modules, have fallen by more than 11% this week. Pegatron and Lumentum fell by 3%. Finisar and Skyworks fell by 2%. Foxconn fell by 1%.
Related: For Apple, iPhone X times $999 = Many, many billions
The good news for Apple is that the 2017 holiday shopping season was likely its best ever. Analysts predict Apple sold as many as 90 million iPhones over the past three months, which would blow away the company's previous record.
CEO Tim Cook said in November that orders for the iPhone X have been "very strong" and defended the $999 price tag for the redesigned phone. The company hasn't publicly released iPhone X sales figures.
Apple's stock is up 50% for the year and continues to inch closer to becoming the first public company worth $1 trillion.
Over the past decade, Apple's (NASDAQ:AAPL) financial performance has become increasingly reliant on a single product: the iPhone. This is not news. These days, the iPhone typically comprises between 60% and 70% of revenue in any given quarter.
For most of the iPhone's history, Apple only released a single model per year, efficiently focusing its development resources and strategically choosing product depth over product breadth, which incidentally concentrates product risk. Starting in 2013, Apple released two models per year, and then unveiled three models in 2017 for the first time. Theoretically, diversifying the lineup reduces risk, but ultimately the disproportionate importance of the iPhone inevitably created a massive risk factor that investors have had to contemplate for years: What if an iPhone flops?
A flop can also mean failed execution
The possibility of an iPhone flop hasn't really been an issue thus far. Even when some headline features prove to be gimmicky novelties (like Siri initially or 3D Touch), Apple's marketing department picks up the slack and still convinces consumers that they need it.
Fortunately, Apple has mostly enjoyed successful iPhone launches every year. The company has a strong track record of introducing new features that consumers covet so much that they line up for days. Meanwhile, Apple has been able to overcome prior supply constraints with relative ease, particularly back when Tim Cook was COO and earned the reputation of being an adept supply chain coordinator and efficient operator.
There are two main ways that an iPhone could flop: The product itself could fail to impress and demand could falter, or Apple could fail to execute in meeting demand even if the product is strong. It's this latter scenario that is currently unfolding before our eyes.
With daily reports detailing iPhone X production challenges, the all-important new flagship looks more and more like it will be a flop. Not because the product itself is weak -- quite the contrary, iPhone X looks like an incredible smartphone -- but more due to Apple's inability to meet demand. In no uncertain terms, a failed iPhone launch is investors' worst nightmare, one that promises to wreak havoc on financial results during Apple's most important quarter of the year.
It's worth revisiting Apple's risk factor legalese (emphasis added):
Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and successfully manage the transition to these new and upgraded products. The success of new product introductions depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, the Company's ability to manage the risks associated with new product production ramp-up issues, the availability of application software for new products, the effective management of purchase commitments and inventory levels in line with anticipated product demand, the availability of products in appropriate quantities and at expected costs to meet anticipated demand and the risk that new products may have quality or other defects or deficiencies in the early stages of introduction. Accordingly, the Company cannot determine in advance the ultimate effect of new product introductions and transitions.
The production and supply issues this year appear to be worse than they've ever been, and the supply chain logistics also sound more complicated than ever before due to how much technology Apple is packing into iPhone X. While demand outstripping supply is generally a good problem to have, and one that Apple is all too familiar with (and it's still better than the inverse scenario), that demand is only as good as Apple's ability to meet it in a timely fashion.
iPhone X represents Apple's biggest risk factor materializing: an unsuccessful product launch.
www.fool.com/investing/2017/10/25/why-iphone-x-is-apple-i...
iPhone X, [FLOW] Clear..What could Apple do with its $250 billion in cashflow? The imagination of Internet users is limitless... [Sale]Why iPhone X Is Apple Investors' Worst Nightmare Come True–Is the iPhone X a disappointment? Investors think so
FINANCE - There are problems of rich, very rich, and Apple's problems. The success of the inventor of the iPhone has made it possible for the group to sit on a mountain of more than $250 billion in cash. But his problem now is knowing what to do with it.
According to its quarterly results released on Tuesday, May 2, Apple had 258.8 billion available cash as of March 31,2010, the vast majority of which was stored abroad. This is equivalent to the Gross Domestic Product of a country like Chile.
Such means would enable it to buy many of its competitors or even diversify into other sectors such as electric cars, a product to which it attaches great interest, for example by buying Tesla.
Surprised by the huge amount of its reserves, the imagination of Internet users was immediately overwhelmed, transforming Twitter into a more or less zany idea box.
Shares of Apple and its suppliers tumbled this week after multiple industry analysts predicted weak demand for the new flagship iPhone. Apple's (AAPL) stock slid by as much as 4% in premarket trading Tuesday.
The radically redesigned iPhone X was supposed to give Apple a boost following a couple years of sinking sales. Early sales reports were positive, and Morgan Stanley reported last week that the iPhone X is especially hot in China.
But the first wave of demand among Apple fanatics seems to have passed, and analysts are skeptical that more casual iPhone customers will upgrade to the iPhone X.
Citing the iPhone X's super-high $1,000 price and confusing features, a Sinolink Securities analyst predicted that Apple will ship just 35 million iPhone X devices in the first three months of 2018, roughly 10 million fewer than previously expected. JL Warren Capital now estimates Apple will deliver just 25 million iPhone Xs. Jefferies is slightly more bullish, expecting Apple to ship 40 million.
The analyst reports come after Taiwanese newspaper Economic Daily reported Monday that Apple had dramatically lowered its own iPhone sales expectations from 50 million to 30 million.
Apple didn't immediately respond to CNNMoney's request for comment.
Investors punished companies that make iPhone components. Shares Genius Electronic Optical, which makes of iPhone lens modules, have fallen by more than 11% this week. Pegatron and Lumentum fell by 3%. Finisar and Skyworks fell by 2%. Foxconn fell by 1%.
Related: For Apple, iPhone X times $999 = Many, many billions
The good news for Apple is that the 2017 holiday shopping season was likely its best ever. Analysts predict Apple sold as many as 90 million iPhones over the past three months, which would blow away the company's previous record.
CEO Tim Cook said in November that orders for the iPhone X have been "very strong" and defended the $999 price tag for the redesigned phone. The company hasn't publicly released iPhone X sales figures.
Apple's stock is up 50% for the year and continues to inch closer to becoming the first public company worth $1 trillion.
Over the past decade, Apple's (NASDAQ:AAPL) financial performance has become increasingly reliant on a single product: the iPhone. This is not news. These days, the iPhone typically comprises between 60% and 70% of revenue in any given quarter.
For most of the iPhone's history, Apple only released a single model per year, efficiently focusing its development resources and strategically choosing product depth over product breadth, which incidentally concentrates product risk. Starting in 2013, Apple released two models per year, and then unveiled three models in 2017 for the first time. Theoretically, diversifying the lineup reduces risk, but ultimately the disproportionate importance of the iPhone inevitably created a massive risk factor that investors have had to contemplate for years: What if an iPhone flops?
A flop can also mean failed execution
The possibility of an iPhone flop hasn't really been an issue thus far. Even when some headline features prove to be gimmicky novelties (like Siri initially or 3D Touch), Apple's marketing department picks up the slack and still convinces consumers that they need it.
Fortunately, Apple has mostly enjoyed successful iPhone launches every year. The company has a strong track record of introducing new features that consumers covet so much that they line up for days. Meanwhile, Apple has been able to overcome prior supply constraints with relative ease, particularly back when Tim Cook was COO and earned the reputation of being an adept supply chain coordinator and efficient operator.
There are two main ways that an iPhone could flop: The product itself could fail to impress and demand could falter, or Apple could fail to execute in meeting demand even if the product is strong. It's this latter scenario that is currently unfolding before our eyes.
With daily reports detailing iPhone X production challenges, the all-important new flagship looks more and more like it will be a flop. Not because the product itself is weak -- quite the contrary, iPhone X looks like an incredible smartphone -- but more due to Apple's inability to meet demand. In no uncertain terms, a failed iPhone launch is investors' worst nightmare, one that promises to wreak havoc on financial results during Apple's most important quarter of the year.
It's worth revisiting Apple's risk factor legalese (emphasis added):
Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and successfully manage the transition to these new and upgraded products. The success of new product introductions depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, the Company's ability to manage the risks associated with new product production ramp-up issues, the availability of application software for new products, the effective management of purchase commitments and inventory levels in line with anticipated product demand, the availability of products in appropriate quantities and at expected costs to meet anticipated demand and the risk that new products may have quality or other defects or deficiencies in the early stages of introduction. Accordingly, the Company cannot determine in advance the ultimate effect of new product introductions and transitions.
The production and supply issues this year appear to be worse than they've ever been, and the supply chain logistics also sound more complicated than ever before due to how much technology Apple is packing into iPhone X. While demand outstripping supply is generally a good problem to have, and one that Apple is all too familiar with (and it's still better than the inverse scenario), that demand is only as good as Apple's ability to meet it in a timely fashion.
iPhone X represents Apple's biggest risk factor materializing: an unsuccessful product launch.
www.fool.com/investing/2017/10/25/why-iphone-x-is-apple-i...