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Apple component prepayments grow by $1.15B as new products loom

post #1 of 14
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With persistent rumors of a new iPhone, smaller iPad and new iPods set to launch soon, Apple saw its prepayment for inventory components increase by $1.15 billion sequentially in the June quarter.

Apple's increasing expenses were revealed in the company's 10-Q filing and highlighted on Monday by analyst Maynard Um with Wells Fargo Securities. Growing by $1.15 billion, prepayment for components reached 12.6 percent of Apple's total sales, which he noted is the highest level seen by Apple in the last four years.

Um said the growth in expenses is a strong sign that Apple is securing component supplies ahead of potentially multiple product launches. He noted that historically, Apple's increases in inventory component prepayments have been followed by what Um called "a solid ramp-up in revenue" in the proceeding two or three quarters.

The significant growth in spending comes as Apple is rumored to be planning to launch a number of new products in the coming months. Most notably, the company is expected to update its iPhone this fall with a new sixth-generation model.

Other rumored products that could be introduced before the end of the year include a smaller iPad expected to have a 7.85-inch display, a new 13-inch MacBook Pro with Retina display, an updated iMac, a new iPod touch, and potentially even a redesigned iPod nano. If all of those products do, in fact, launch later this year, it would likely be the busiest holiday shopping season in Apple's history.

Wells Fargo


Apple Chief Executive Tim Cook said last week that widespread rumors of his company's next-generation products had a negative effect on sales of existing products in the last quarter. Cook said he has the sense that there is "incredible anticipation" for Apple's future products, while Chief Financial Officer Peter Oppenheimer said he and other executives are "excited about the new product pipeline."

One survey released last week found that there is an "unprecedented level" of demand for Apple's next iPhone, even though the product has not yet been officially announced by the company. ChangeWave's poll found that 14 percent of consumers indicated they are "very likely" to buy Apple's next iPhone, while another 17 percent said they are "somewhat likely."

In comparison, last October, 10 percent of consumers said they were "very likely" to buy an iPhone 4S, while 11.5 percent said they were "somewhat likely" to do so. The iPhone 4S went on to have a record breaking debut, resulting in sales of 37 million iPhones during the holiday 2011 launch quarter.
post #2 of 14

New products loom?

 

But I thought Apple was only interested in spending money on litigation. 

 

 

 

 

/s

post #3 of 14

Nice to have the cash to pay for all your production costs upfront.  Wonder if Microsoft has invested that much to secure production for their upcoming tablets?  Do they need to?????  /s
 

post #4 of 14

$1.15B is not 12.6% of sales.

 

Indeed, a glance at the chart says that prepayments are more like ~$4.5B (i.e., the total of the numbers reported under both "Other Assets" and "Other Current Assets"). Any reason, AI, that you're only focusing on a subset?

post #5 of 14
Quote:
Originally Posted by anantksundaram View Post

$1.15B is not 12.6% of sales.

Indeed, a glance at the chart says that prepayments are more like ~$4.5B (i.e., the total of the numbers reported under both "Other Assets" and "Other Current Assets"). Any reason, AI, that you're only focusing on a subset?

Nice catch. I'm now confused by their numbers, too.

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post #6 of 14
Quote:
Originally Posted by icoco3 View Post

Nice to have the cash to pay for all your production costs upfront.  Wonder if Microsoft has invested that much to secure production for their upcoming tablets?  Do they need to?????  /s
 

 

 

This is an interesting read:

 

http://www.zdnet.com/microsofts-radical-new-business-plan-is-hidden-in-plain-sight-7000001750/

 

 

Among other things, it suggests that MS may use low prices to garner market share for the WART and WIPT surface tablets.

 

...So, yes, MS could be planning on using $ muscle power to drive acceptance of their tablets.

 

And it could be to MS' advantage to have low price == high demand... but limited supply until all the planned pieces (Windows 2013)  are there...

 

 

Another case of MS announcing things just to deter buying decisions for competitive products...

 

 

I am reminded of an old "automotive" joke from the 1940s:

 

A guy walks into an auto dealership and the conversation goes like this:

 

Customer:  "I want to buy a new car to impress my girlfriend".

 

Salesman:  "Why not buy a Kaiser -- and surprise her?".

 

Salesman:  "Or, maybe buy a Frazer -- and amaze her?".

 

Customer, leaving:  "Nah!  I'll just buy a Tucker!".


Edited by Dick Applebaum - 7/30/12 at 12:49pm
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post #7 of 14
Quote:
Originally Posted by Dick Applebaum View Post


This is an interesting read:

http://www.zdnet.com/microsofts-radical-new-business-plan-is-hidden-in-plain-sight-7000001750/


Among other things, it suggests that MS may use low prices to garner market share for the WART and WIPT surface tablets.

...So, yes, MS could be planning on using $ muscle power to drive acceptance of their tablets.

Is that Windows ARM Real Time and Windows Intel Part Time?

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #8 of 14
Quote:
Originally Posted by SolipsismX View Post


Is that Windows ARM Real Time and Windows Intel Part Time?

 

Others coined WART... I coined WIPT to mean: Windows Intel Pro Tablet...

 

But I like your acronyms better :)

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post #9 of 14

I tried to submit a topic for discussion on AI -- but the site refused the request:  Unauthorized request, or request token has expired.

 

So Here's the request as a post to this thread... somewhat related:

 

 

Perfect Storm Brewing with MS Surface, Nexus 7, and iPad?

 

I have been reading articles/rumors that indicate that the whole tablet landscape may change dramatically in the next 2 months.

 
1) MS will release the WART along with Windows 8RT in October:
 
 
 
2) MS may be going into the hardware business in a big way with low prices to garner market share.
 
 
3) Apple may counter with release of iPad mini and earlier than expected release of the full-size iPad 4
 
 
4) Office 2013 the purported raison d'etre for the WART and later the WIPT may be a disaster.
 
 
5) And of course there the usual Sammy and Amazon tablet rumors -- too numerous to mention
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post #10 of 14

This is one of the reasons Apple has stockpiled over 100billion in cash: prepayment for components.  Prepaying not only guarantees supply, but it likely gets them the best price.  Instead of financing with "I'll pay you later" terms, not only does Apple save money because they don't have to pay any interest, but they likely get a lower price because of it.

 

When the flooding in Taiwan occurred, I heard Apple basically asked its affected suppliers to put it at the top of the list for hard drives and such and pre-paid for them in exchange for this perk.  It gave them leverage other companies do not have.

post #11 of 14

Glad to see the Apple TV rumor has been put to rest, at least for now.
 

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post #12 of 14
Quote:
Originally Posted by anantksundaram View Post

$1.15B is not 12.6% of sales.

 

Indeed, a glance at the chart says that prepayments are more like ~$4.5B (i.e., the total of the numbers reported under both "Other Assets" and "Other Current Assets"). Any reason, AI, that you're only focusing on a subset?


Read the article again it says "Growing by $1.15 billion, prepayment for components reached 12.6 percent of Apple's total sales, which he noted is the highest level seen by Apple in the last four years.'

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post #13 of 14
Originally Posted by Realistic View Post
Glad to see the Apple TV rumor has been put to rest, at least for now.

 

Just you wait. When the iPhone/iPod event comes and goes without a whisper of a 7" iPad, they'll have to have something to fall back on and whine about.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #14 of 14

I tried to submit a topic for discussion on AI

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