On Apple Earnings

October 26, 2012

Apple announced Q4 earnings, and while they made a pile, it wasn’t enough to meet analyst expectations, resulting in a rare miss.

And I think there’s a problem brewing. It has nothing to do with demand, or designing less-insanely-great products. I think there’s some trouble on the manufacturing end. As in, Apple’s suppliers may be having difficulty making enough product to satisfy the demand.¬†There are quality control issues with the iPhone 5, Foxconn has stated it’s the hardest device they’ve ever manufactured, and supplies are supposed to be constrained with the new iMacs.¬†And less products available to sell, affects earnings in a very real way.

I’d even speculate that manufacturer difficulty in ramping up all these new products ramped up affected this year’s product release schedule. Perhaps the iMac, iPad Mini, and possibly even the iPhone 5 were supposed to drop sooner, but the manufacturers were behind, and Apple obviously didn’t want to announce anything without enough product available to meet initial demand.

So now the question becomes – since all this new stuff only showed up within the last months of 2012, will Q1 earnings be a blow out? Perhaps the really low guidance has set the stage.

But honestly – I’m a little worried.

Comments

  1. Joe Cieplinski says:

    The lowered forecast for Q1 isn’t fear there won’t be massive sales, at least. But it is troubling that they’re ramping up so many different new products all at once. That brings gross margins down overall, since the first million of any product always costs more to build than the second. And then there’s the real fear of supply constraints.

    I’m already worried I won’t be able to get my new iMac until sometime in January. Wouldn’t it be funny if people were lining up outside the retail stores for Macs, instead of iPhones?

    I think your theory might be right. That they were supposed to release a lot of this stuff more sporadically throughout the year, but that one thing or another forced the releases to all fall on top of one another. A lot of pundits are thinking this is all part of the plan, that Apple wanted to maximize the holiday season. I think that’s hogwash. How many people, realistically, buy someone a $800 iPad, or a $1700 MacBook Pro for a Christmas gift? Sure, sales always increase during the holidays, but the vast majority of Apple products, I’m willing to bet, are purchased for the individual whose credit card is being charged. Makes sense for iPod nanos, maybe. But beyond that, I’m not buying the whole Christmas season stuff. November is a lousy time to release new products aimed at education, too.

    • It’s hard to tell if the manufacturers are really holding things back since Apple is so secretive, and the iPads are so new so there isn’t really a release schedule, but the iMac / Mac Mini definitely went for a longer than usual without an upgrade, and the Mac Pro really, still hasn’t been updated. Maybe the iPhone 5 started running into issues around mid-year, so it and the Retina MacBooks were made priorities, which affected the iPad Mini, iMac / Mac Mini. And an iPhone 5 delay would also explain why the rumored case pictures were floating around for what seemed like literally months before the release.

      I agree that all these products appearing right before Christmas seems atypical. iPods, iPhones, yes, but I dunno about launching the iPad Mini + desktop Macs right now. I’d much rather have products spaced out all year. I personally was planning on buying a desktop back around WWDC, and literally because I’m only buying a Mac Mini now (and contemplating a new monitor) I don’t feel able to buy the iPad Mini, too.

      Anyhow, I do hope the manufacturers will get caught up, and this is just a bump on the way to a huge Q1.

  2. Joe Cieplinski says:

    The more I think about it, the more I think circumstances beyond Apple’s control threw off their usual product cycle. If so, they’re doing a pretty good job of hiding it, though some short term stock pain is inevitable. Still, like I said, the problem isn’t that people are bored of Apple’s products, so I think long term 2013 still looks pretty good. The competition is still nowhere near a threat.