Apple's 10K outlines risks from economy, third party developers
Apple's latest submissions to the Securities and Exchange Commission report some new, relatively unfamiliar dangers related to the weak world economy and third party development that could potentially hurt its business.
Like all US companies, Apple is compelled to report to the SEC in detail about a variety of risks the company conceivably faces, in order to give investors a clear picture of the threats to its bottom line. Apple's risk statement in its 10K form typically covers the gamut from general competition in global markets to the special challenges of staying on top of a rapidly changing tech industry. It also notes everything from changes in regulations and tax law to fluctuating component prices to threats from terrorism.
The economy
This year, the company outlines a series of new risks facing the company related to current economic conditions. These included postponed spending by consumers and businesses in response to "tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for the Company?s products and services."
The report also singles out the "very pronounced" strengthening of the dollar, "since the Company generally raises prices on goods and services sold outside the U.S. to offset the effect." That will result in higher prices in overseas markets. The weak dollar has, until now, been giving Apple a big boost in foreign markets.
Apple also outlined "continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer spending behavior." If enough customers are either plagued by too many costs or simply too jittery to spend the money they have, this could reduce demand for Apple's products and its finances as a result, the company elaborates.
Apple's 10K also presents the possibility of a domino effect where financial institutions' own troubles could spread and make it difficult for customers to pay or even for resellers to stock items.
"The current financial turmoil affecting the banking system and financial markets and the possibility that financial institutions may consolidate or go out of business," the filing reads. This has "resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets.
"There could be a number of follow-on effects from the credit crisis on the Company?s business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of the Company?s products and/or customer, including channel partner, insolvencies; and failure of derivative counterparties and other financial institutions negatively impacting the Company?s treasury operations... Uncertainty about current global economic conditions could also continue to increase the volatility of the Company?s stock price."
Third party development
Apple further notes possible new pitfalls in its dealings with third party developers, warning that the advent of the App Store has expanded the appeal (and turn-offs) of its handhelds as well as Macs. "The Company believes decisions by customers to purchase its hardware products, including its Macs, iPods and iPhones, are often based to a certain extent on the availability of third-party software applications and services," it says.
Among the factors related to ensuring third-party development continues is "the perceived strength of the Company and its products, the anticipated revenue that may be generated, continued acceptance by customers of Mac OS X, and the costs of developing such applications and services." Apple also lists its "minority share of the global personal computer" as a plausible reason for "developers to question the Company?s prospects," resulting in the potential for lost development.
And as many are aware, the company explains that its occasional tendency to develop software that treads on others' products may well damage its relationship with companies that produce important apps. "The Company?s development of its own software applications and services may also negatively affect the decisions of third-party developers, such as Microsoft, Adobe, and Google, to develop, maintain, and upgrade similar or competitive software and services for the Company?s products," the company points out.
The Cupertino, Calif.-based firm all the same recognizes that supporting third party development is critical for its new mobile platform: it needs developers to produce "compelling and innovative" apps for the iPhone and iPod touch and needs to persuade creators as much as it does end users. "The availability and development of these applications also depend on developers? perceptions and analysis of the relative benefits of developing software for the Company?s products rather than its competitors?," it says, alluding to smartphone operating systems like Google's Android, RIM's BlackBerry OS, or Symbian. "If developers focus their efforts on these competing platforms, the availability and quality of applications for the Company?s devices may suffer."
Like all US companies, Apple is compelled to report to the SEC in detail about a variety of risks the company conceivably faces, in order to give investors a clear picture of the threats to its bottom line. Apple's risk statement in its 10K form typically covers the gamut from general competition in global markets to the special challenges of staying on top of a rapidly changing tech industry. It also notes everything from changes in regulations and tax law to fluctuating component prices to threats from terrorism.
The economy
This year, the company outlines a series of new risks facing the company related to current economic conditions. These included postponed spending by consumers and businesses in response to "tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for the Company?s products and services."
The report also singles out the "very pronounced" strengthening of the dollar, "since the Company generally raises prices on goods and services sold outside the U.S. to offset the effect." That will result in higher prices in overseas markets. The weak dollar has, until now, been giving Apple a big boost in foreign markets.
Apple also outlined "continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer spending behavior." If enough customers are either plagued by too many costs or simply too jittery to spend the money they have, this could reduce demand for Apple's products and its finances as a result, the company elaborates.
Apple's 10K also presents the possibility of a domino effect where financial institutions' own troubles could spread and make it difficult for customers to pay or even for resellers to stock items.
"The current financial turmoil affecting the banking system and financial markets and the possibility that financial institutions may consolidate or go out of business," the filing reads. This has "resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets.
"There could be a number of follow-on effects from the credit crisis on the Company?s business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of the Company?s products and/or customer, including channel partner, insolvencies; and failure of derivative counterparties and other financial institutions negatively impacting the Company?s treasury operations... Uncertainty about current global economic conditions could also continue to increase the volatility of the Company?s stock price."
Third party development
Apple further notes possible new pitfalls in its dealings with third party developers, warning that the advent of the App Store has expanded the appeal (and turn-offs) of its handhelds as well as Macs. "The Company believes decisions by customers to purchase its hardware products, including its Macs, iPods and iPhones, are often based to a certain extent on the availability of third-party software applications and services," it says.
Among the factors related to ensuring third-party development continues is "the perceived strength of the Company and its products, the anticipated revenue that may be generated, continued acceptance by customers of Mac OS X, and the costs of developing such applications and services." Apple also lists its "minority share of the global personal computer" as a plausible reason for "developers to question the Company?s prospects," resulting in the potential for lost development.
And as many are aware, the company explains that its occasional tendency to develop software that treads on others' products may well damage its relationship with companies that produce important apps. "The Company?s development of its own software applications and services may also negatively affect the decisions of third-party developers, such as Microsoft, Adobe, and Google, to develop, maintain, and upgrade similar or competitive software and services for the Company?s products," the company points out.
The Cupertino, Calif.-based firm all the same recognizes that supporting third party development is critical for its new mobile platform: it needs developers to produce "compelling and innovative" apps for the iPhone and iPod touch and needs to persuade creators as much as it does end users. "The availability and development of these applications also depend on developers? perceptions and analysis of the relative benefits of developing software for the Company?s products rather than its competitors?," it says, alluding to smartphone operating systems like Google's Android, RIM's BlackBerry OS, or Symbian. "If developers focus their efforts on these competing platforms, the availability and quality of applications for the Company?s devices may suffer."
Comments
[edited: please, no political discussion in this thread, or other threads attached to non-political stories. Too many other posts to clean up, just posting note here and hopefully it's understood]
Will AppleInsider please post a new thread now on how Apple's $100,000 political donation just went down the drain in California related to gay marriage?
Of what relevance is that to this outline by Apple? Companies piss away substantially more than that on private jet fuel for execs.
Will AppleInsider please post a new thread now on how Apple's $100,000 political donation just went down the drain in California related to gay marriage?
1.How is that comment relevant to this thread?
2.Can you please explain how the donation "just went out the drain"?
"The Company’s development of its own software applications and services may also negatively affect the decisions of third-party developers, such as Microsoft, Adobe, and Google, to develop, maintain, and upgrade similar or competitive software and services for the Company’s products," the company points out.
This is a clear message to myself that Apple will be offering products that directly compete with these developers, moreso going forward than currently so.
Why not spend 100K to let statutory rapists out of prison too.
Can't believe they spent 100k trying to let homo's get married.
Why not spend 100K to let statutory rapists out of prison too.
Here's the deal my friend,
It is not a civil right to rape people; that is a crime. The big problem here is that prop 8 deals more with civil right issues, than with what many religions define "sin". A crime can be a "sin", but "sin" isn't always a crime. Based on your comment, we should consider "adultery", or "drinking coffee" a crime.
Again, "sin" is interpreted many ways by different religions. In no way am I trying to get in a religious dispute, since the topic is quite sensitive and fragile. What I'm ultimately trying to get at is that this is a civil right issue period, and I admire Apple for recognizing this.
Section 1 describes a scenario of total financial Armageddon but offers no positive alternative. Maybe AAPL knows something I don't! Either the 10K was very poorly drafted or the company is on the rocks.
Can't believe they spent 100k trying to let homo's get married.
Why not spend 100K to let statutory rapists out of prison too.
If you honestly believe that is sound logic you really really need help. That might have been the worst analogy ever.
Here's the deal my friend,
It is not a civil right to rape people; that is a crime. The big problem here is that prop 8 deals more with civil right issues, than with what many religions define "sin". A crime can be a "sin", but "sin" isn't always a crime. Based on your comment, we should consider "adultery", or "drinking coffee" a crime.
Again, "sin" is interpreted many ways by different religions. In no way am I trying to get in a religious dispute, since the topic is quite sensitive and fragile. What I'm ultimately trying to get at is that this is a civil right issue period, and I admire Apple for recognizing this.
Statutory rape is not rape either, it is consensual sex between a person 18 or over and a person under 18. Hey if 2 people are consenting it must be OK
Can't believe they spent 100k trying to let homo's get married.
Why not spend 100K to let statutory rapists out of prison too.
This is offensive. Please do not post here any more.
The report also singles out the "very pronounced" strengthening of the dollar, "since the Company generally raises prices on goods and services sold outside the U.S. to offset the effect." That will result in higher prices in overseas markets. The weak dollar has, until now, been giving Apple a big boost in foreign markets.
Can someone explain to me in a simple manner (or direct me to information about) what causes currency exchange rates to shift around so much?
Can't believe they spent 100k trying to let homo's get married.
Why not spend 100K to let statutory rapists out of prison too.
unbelievable.
(not the 100k, you.)
just because it failed doesn't mean it was wasted,
Sorry I know this is OT but am curious to know why it failed? I'm also amazed that this is still an issue in modern society. I thought the dark ages were over. As far as I"m aware gays have enjoyed equal rights in the UK for a while.
EDIT: No need to explain have just read in the news.
The report also singles out the "very pronounced" strengthening of the dollar, "since the Company generally raises prices on goods and services sold outside the U.S. to offset the effect." That will result in higher prices in overseas markets. The weak dollar has, until now, been giving Apple a big boost in foreign markets.
Now this is pissing me off. Why do we Europeans have to pay more to offset the weak American economy? It's not our fault that your economy went down the trench.
This is offensive. Please do not post here any more.
The wussyfication of America... Hey, you guys are all up in arms as soon as someone seems to deny you your right of free speech - no someone's speaking out his opinion, and all you do is swirling the political correctness club by saying "Oh noes!1 This is offensive!" If you can't endure other people's opinions, a forum isn't the place for you.
Can someone explain to me in a simple manner (or direct me to information about) what causes currency exchange rates to shift around so much?
so far as I can tell, the currency markets are the one market where traders/investors have been making a decent profit since this bear market began, so there could be a certain amount of speculation going on and that would cause currencies to move.
I transferred some GBP to $$ last year, in anticipation of a) a fall in the rate and b) the new MBP's coming out in October. Sitting on a 250GBP profit right now
The report also singles out the "very pronounced" strengthening of the dollar, "since the Company generally raises prices on goods and services sold outside the U.S. to offset the effect." That will result in higher prices in overseas markets. The weak dollar has, until now, been giving Apple a big boost in foreign markets.
Yeah... they've massively increased our MBP prices here to offset the conversion back to US dollars. Still like the machine, and I understand that they want to maintain the same US price as they convert, but it will reduce local sales significantly.
Perhaps.... say 30% fewer sales?
The wussyfication of America... Hey, you guys are all up in arms as soon as someone seems to deny you your right of free speech - no someone's speaking out his opinion, and all you do is swirling the political correctness club by saying "Oh noes!1 This is offensive!" If you can't endure other people's opinions, a forum isn't the place for you.
I live in Australia. Bad taste crosses international borders.
I expect to share opinions about Apple software and hardware not editorial commentary about what other people think I should or should not do with my dick.
My initial comment was courteous and did not contain the nearly as many exclamation marks or poorly-typed ones as you suggested.
If we had had met under different cirumstances you might find I do not "swirl" and I am all kinds of politically incorrect.
Make your own damn thread, that $100,000 went to a good cause (letting homosexuals marry as well as keeping more trash out of the California Constitution, it's lengthy enough as it is), just because it failed doesn't mean it was wasted, it's like any donation to the candidates who didn't win (say, John McCain or Hilary Clinton) was wasted.
Sebastian
I never said it was wasted or if it was a good or bad cause. But it obviously failed to persuade the people of Cal-ee-for-nee-a.
Apple could have invested this $100,000 in a more wisely fashion given the economic meltdown.
Anyway our new President opposes gay marriage as well.
my only comment to the portion about 3rd party development---- "Duh!!!!!"
if Steve Jobs is in power and it's taking this long to officially acknowledge important issues.. maybe he's not the best to lead the company.