Apple supplier Pegatron says revenues hit by waning demand for iPad mini
Demand for Apple's iPad mini may be slackening, as a major component supplier for the small tablet has forecast a considerable drop in its revenue.
Pegatron, which contracts with Apple for components that go into the iPad mini, iPhone 4S, and other products, forecast on Wednesday its largest consumer electronics revenue drop in six quarters. The component supplier predicted second quarter consumer electronics revenue 25 to 30 percent lower than the prior quarter. The only drop larger than Pegatron's forecast was a 37 percent decline in the fourth quarter of 2011, according to Bloomberg.
The iPad mini makes up more than half of what Pegatron brings in from consumer electronics, and the company's CEO Jason Cheng said that the iPad mini revenue dip was "more on demand, while price has been stable."
Pegatron's other major division is its computing unit, which expects to see a 5 to 10 percent increase in shipments by the end of the second quarter. The smaller communications hardware unit is forecast to see flat revenues for the quarter.
Pegatron is the latest in a line of Apple component suppliers that have cited softer demand of Apple's best selling products. Earlier this month, shielding and heat control supplier Laird said demand from its largest customer dropped 17 percent, and observers believe that the company's largest customer is Apple.
Word in April from energy and audio chip maker Cirrus Logic that iOS device demand was softening sent Apple shares tumbling below $400 for the first time since 2011. Apple soon after reported its first profit decline in a decade.
Also in April, Korean electronics giant LG, which supplies Apple with displays for its iPhone and iPad, cited "weakened" demand for those devices. LG, though, may be gearing up to produce Retina iPad mini panels as Apple is expected to refresh the diminutive tablet with a higher resolution screen in the near future.
Whether Pegatron's prediction bodes poorly for Apple or not remains to be seen. Apple CEO Tim Cook sought to dissuade from too much tea leaf reading when it comes to component suppliers.
"The supply chain is very complex," Cook said in January during the company's quarterly conference call, "and we obviously have multiple sources for things. Yields might vary, supplier performance might vary."
Pegatron, which contracts with Apple for components that go into the iPad mini, iPhone 4S, and other products, forecast on Wednesday its largest consumer electronics revenue drop in six quarters. The component supplier predicted second quarter consumer electronics revenue 25 to 30 percent lower than the prior quarter. The only drop larger than Pegatron's forecast was a 37 percent decline in the fourth quarter of 2011, according to Bloomberg.
The iPad mini makes up more than half of what Pegatron brings in from consumer electronics, and the company's CEO Jason Cheng said that the iPad mini revenue dip was "more on demand, while price has been stable."
Pegatron's other major division is its computing unit, which expects to see a 5 to 10 percent increase in shipments by the end of the second quarter. The smaller communications hardware unit is forecast to see flat revenues for the quarter.
Pegatron is the latest in a line of Apple component suppliers that have cited softer demand of Apple's best selling products. Earlier this month, shielding and heat control supplier Laird said demand from its largest customer dropped 17 percent, and observers believe that the company's largest customer is Apple.
Word in April from energy and audio chip maker Cirrus Logic that iOS device demand was softening sent Apple shares tumbling below $400 for the first time since 2011. Apple soon after reported its first profit decline in a decade.
Also in April, Korean electronics giant LG, which supplies Apple with displays for its iPhone and iPad, cited "weakened" demand for those devices. LG, though, may be gearing up to produce Retina iPad mini panels as Apple is expected to refresh the diminutive tablet with a higher resolution screen in the near future.
Whether Pegatron's prediction bodes poorly for Apple or not remains to be seen. Apple CEO Tim Cook sought to dissuade from too much tea leaf reading when it comes to component suppliers.
"The supply chain is very complex," Cook said in January during the company's quarterly conference call, "and we obviously have multiple sources for things. Yields might vary, supplier performance might vary."
Comments
Supplier Fail
Apple Doom
Assembly lines need to change, workers need to be trained, parts shipped in.
It's not a seamless transition from old to new.
Quote:
Originally Posted by SpamSandwich
Pegatron's waning revenue is not the same as waning demand for iPads.
But it sounds good. Apple products typically do well over the first 6 months before they start dropping in sales. Then Apple starts to finish the next product, ramp up production, and then a new product announcement with more sales than the previous model. Plus we're going into the Summer months and the summer months are typically low for the high tech sector.
Quote:
Originally Posted by SpamSandwich
Pegatron's waning revenue is not the same as waning demand for iPads.
Yeah, but close enough.
Has any Apple supplier reported an "increase" in demand, orders, revenues in the last six months?
Quote:
Originally Posted by Evilution
There has to be a wane in the old model before they start assembling the new model.
Assembly lines need to change, workers need to be trained, parts shipped in.
It's not a seamless transition from old to new.
That's not necessarily true. Support demand were completely stable and, as you say, assembly lines have to change, etc. Then I would expect suppliers (of parts consumed by the assembly line) would see a surge in orders. Just as an example, with numbers I'm making up. Suppose Apple sells and assembles 10 million iPad minis a month, and it's going to take 1 month to transistion. Then then need to make more than 10 million for a few months before the assembly line starts cranking out Mini2s. So Pegatron (the winged robotic horse from Greek mythology) would be asked for more widgets for those months.
It may not be waning demand for iPad Mini.
More than likely, it is simply waning demand for Pegatron's particular component as apple revamps the Mini.
Let's keep it real, Pegatron.
LOL
Quote:
Originally Posted by 9secondko
It may not be waning demand for iPad Mini.
More than likely, it is simply waning demand for Pegatron's particular component as apple revamps the Mini.
Let's keep it real, Pegatron.
LOL
That is a great point! Is Pegatron a supplier for the new iPad Mini to be relased...well soon anyway?
Quote:
Originally Posted by isaidso
Yeah, but close enough.
Has any Apple supplier reported an "increase" in demand, orders, revenues in the last six months?
Yes. When new iPads were introduced in Q1 of the calendar year, the preceding Xmas season would be a boom quarter for everyone.
But this really shows comparing the four quarters of a year is stupid. Seasonal demand is as much a factor as impending product upgrade.
Quote:
Originally Posted by MacAttack99
Less demand can mean many things, which have been mentioned. I believe Apple is trying to create more components in-house. This would help the company become more self reliant and increase its margins.
They might be getting more suppliers involved as well.....so orders from Pegatron might be less.
I tell people this all the time. At Apple just because a supplier exist in the current product offering it does not mean they automatically show up in the next product. From time to time as Apple product evolve they move to different suppliers as a matter of course. One day you are in and the next day you are out. Apple has very little loyalty to any of its suppliers. Wall Street know this and the reason why when a supplier has lots of Apple's business Wall Street it not impressed and thus do not recommend investing in the suppliers of Apple,
This is like the 2nd or 3rd announcement like this and Apple stock keeps going up, 2 months ago this same news would have driven the stock down. Wall Street is now ignoring this all as they know it does not mean a thing.
There isn't a real comparison to be made or gauge how iPad mini demand is. It wasn't around this time last year (which is more important than quarter over quarter) and the previous quarter was the holiday quarter, so of course sales are going to dip. And if I remember correctly Apple under-produced the mini not sure how well it would sell, then had to really ramp up production during the holiday quarter to meet demand.
Quote:
Originally Posted by isaidso
Yeah, but close enough.
Has any Apple supplier reported an "increase" in demand, orders, revenues in the last six months?
There was a report that Foxconn was hiring 5000 new factory workers presumably for new Apple products a couple months ago. Nobody paid it much attention, because it's not as sexy as the "Apple is doomed" meme currently popular in tech press.
Granted, this is a rumor site not a factual site. Granted, this story might be true.
But if it isn't true... if iPad Minis are still selling okay... then I say respectfully but with all my heart...
**** you Pegatron for saying this and **** you AI for publishing it.
And if it is true, then **** me for posting like a ****.
Lol