Disaster in Japan hasn't greatly affected Apple's supplies, COO says
Apple Chief Operating Officer Tim Cook said the earthquake and tsunami disaster in Japan did not have a material impact on the supply or availability of components for Apple's iPad 2 or other products last quarter, and he also does not expect the situation to affect the company in the near future.
The real economic impact on Apple from the disaster in Japan will come from sales. Apple has adjusted its expectations down $200 million, represented in its guidance for the June quarter. But Cook noted in his company's quarterly earnings call Wednesday that the economic effects of the disaster in Japan "pales in comparison to the human impact."
Since the event in March, numerous reports have suggested that Apple has seen a significant impact on its component supplies originating from Japan. But Cook took the opportunity during Wednesday's earnings report to dismiss those notions.
Cook revealed that the disaster did not have a major impact on component supplies or pricing in the second quarter of fiscal 2011. He also said that Apple does not anticipate the ongoing situation to have a major impact in the third quarter, either.
However, the COO also cautioned that the situation in Japan remains volatile, with aftershocks and potential power outages.
Cook revealed that Apple's employees have been working "around the clock on contingency plans," to ensure that the company will be able to secure components if deals were to fall through in Japan. But he also said he would prefer to stick with Apple's long-term partners in Japan if possible -- something he said he expects will take place in most cases.
"They have displayed an incredible resilience that I have personally never seen before," he said.
Apple's component supply has come under close watch as the company struggles to meet demand for the iPad 2. Though the disaster in Japan did not have an impact in the last quarter, Cook acknowledged that he wishes Apple could have built many more iPad 2 units to satisfy customer demand.
Cook characterized demand for the iPad 2 as "staggering," and admitted that Apple remains "heavily backlogged" at the moment. In fact, he referred to the iPad 2 as "the mother of all backlogs."
Apple sold 4.69 million iPads during its second fiscal quarter of 2011, a number that was below the 6 million Wall Street analysts were hoping for. But looking forward, Cook said he expects Apple to produce a "very large number of iPads" in the third quarter of fiscal 2011.
The company will need that production, as Cook revealed that the iPad 2 will launch in 13 additional countries starting next week. The COO did not reveal what countries would be included, but Apple had previously announced intentions to begin sales in Hong Kong, Korea and Singapore in April. Another potential country is Japan, which was supposed to receive the iPad 2 in March, but the launch was delayed due to the disaster.
During Wednesday's call, Cook was asked when he thinks Apple might be able to satisfy the incredible demand on the market for the iPad 2. But the executive was reluctant to venture a guess.
"Demand has been staggering, and I'm not going to predict when supply and demand will come into balance," he said. "I can only be confident on the supply side."
The real economic impact on Apple from the disaster in Japan will come from sales. Apple has adjusted its expectations down $200 million, represented in its guidance for the June quarter. But Cook noted in his company's quarterly earnings call Wednesday that the economic effects of the disaster in Japan "pales in comparison to the human impact."
Since the event in March, numerous reports have suggested that Apple has seen a significant impact on its component supplies originating from Japan. But Cook took the opportunity during Wednesday's earnings report to dismiss those notions.
Cook revealed that the disaster did not have a major impact on component supplies or pricing in the second quarter of fiscal 2011. He also said that Apple does not anticipate the ongoing situation to have a major impact in the third quarter, either.
However, the COO also cautioned that the situation in Japan remains volatile, with aftershocks and potential power outages.
Cook revealed that Apple's employees have been working "around the clock on contingency plans," to ensure that the company will be able to secure components if deals were to fall through in Japan. But he also said he would prefer to stick with Apple's long-term partners in Japan if possible -- something he said he expects will take place in most cases.
"They have displayed an incredible resilience that I have personally never seen before," he said.
Apple's component supply has come under close watch as the company struggles to meet demand for the iPad 2. Though the disaster in Japan did not have an impact in the last quarter, Cook acknowledged that he wishes Apple could have built many more iPad 2 units to satisfy customer demand.
Cook characterized demand for the iPad 2 as "staggering," and admitted that Apple remains "heavily backlogged" at the moment. In fact, he referred to the iPad 2 as "the mother of all backlogs."
Apple sold 4.69 million iPads during its second fiscal quarter of 2011, a number that was below the 6 million Wall Street analysts were hoping for. But looking forward, Cook said he expects Apple to produce a "very large number of iPads" in the third quarter of fiscal 2011.
The company will need that production, as Cook revealed that the iPad 2 will launch in 13 additional countries starting next week. The COO did not reveal what countries would be included, but Apple had previously announced intentions to begin sales in Hong Kong, Korea and Singapore in April. Another potential country is Japan, which was supposed to receive the iPad 2 in March, but the launch was delayed due to the disaster.
During Wednesday's call, Cook was asked when he thinks Apple might be able to satisfy the incredible demand on the market for the iPad 2. But the executive was reluctant to venture a guess.
"Demand has been staggering, and I'm not going to predict when supply and demand will come into balance," he said. "I can only be confident on the supply side."
Comments
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Tim, get your act together on supply!
As an Apple shareholder, I'm really getting tired of these supply issues. I'm not sure if Tim Cook is being way too careful about over-production or what, but if he continues like this it's going to bite Apple in the ass.
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Tim, get your act together on supply!
last i heard Android is number one, the slow market share regarding Android tablets will eventually turn the corner to become number one as well. Android started slow too, and look at it now the number one mobile OS in the world. Share holder! LMAO.
As an Apple shareholder, I'm really getting tired of these supply issues. I'm not sure if Tim Cook is being way too careful about over-production or what, but if he continues like this it's going to bite Apple in the ass.
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Tim, get your act together on supply!
Apple has booked up over 60% of the touchscreen capacity. Rumor has it that they're offering upfront cash payments to suppliers to get served first with components.
What more would you have Tim Cook do?
Of course it is so much better to have inventory sit idle than to have customers breaking down your door demanding more.
Cook - you big screw-up! Only managing to produce and ship ~200M iOS devices since 2007. Embarrassing record! Can't you see others have done so much better? For example ... eh ... duh ... bla ... someone help with an example please?
Further, Apple has two problems it has to balance. First, Judging sales volume is always easy in hindsight. You don't want to order three million of something and struggle to sell the last million quickly. Critics said the original iPad would be a flop. Moreover, unsold inventory in Apple's hands at the end of the quarter counts against sales, which is one of the main reasons Apple did away with owning its own factories. If it was over aggressive in ordering product, any unsold product would hurt earnings.
Further, not everything Apple builds is a run away success. Just ask shareholders the quarter Apple introduced the Cube (great computer, but overpriced). Apple had to eat hundreds of millions of dollars because it had to cancel orders of components because it was over aggressive in estimating the number of sales. That write off was compounded by having to count inventory on hand against earnings. Apple was so desperate to make sales at the end of the quarter, I bought a $1999 G4 Tower for $1399, and Apple was kind enough to throw in a free $799 17 Apple Monitor (through my schools Apple Store).
Second, third party factories only can produce so much. Those factories have contracts with producers other then Apple. Moreover, you don't want factories to ramp up to quickly with a new product. The first couple of weeks building a new product is when the manufacturing process is refined. Often small issues are discovered and corrected.
Apple is doing a great job. Amazing really.
As an Apple shareholder, I'm really getting tired of these supply issues. I'm not sure if Tim Cook is being way too careful about over-production or what, but if he continues like this it's going to bite Apple in the ass.
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Tim, get your act together on supply!
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Indeed, Apple is so lucky that Motorola, RIM, Nokia, Dell, Google, HTC, Samsung, Palm, LG, Acer and Sony all have stumbled so badly ... Egad, can't Cook see that if only his company hadn't been the only one that didn't stumble, it wouldn't be so competent?
Wait a second ... the only one that didn't stumble ... is that luck or something else? Dumb luck, that's all. Pfffft ...
Indeed, Apple is so lucky that Motorola, RIM, Nokia, Dell, Google, HTC, Samsung, Palm, LG, Acer and Sony all have stumbled so badly ... Egad, can't Cook see that if only his company hadn't been the only one that didn't stumble, it wouldn't be so competent?
Wait a second ... the only one that didn't stumble ... is that luck or something else? Dumb luck, that's all. Pfffft ...
Wow, you guys are unbelievable. I am the biggest Apple fan ever (don't even ask me about all the Apple stuff I have bought)
If I have a very substantial amount of Apple stock it's because I believe in the company obviously. It doesn't change the fact that Apple isn't perfect.
And unless you own a successful business, make sure you know what you are talking about.
Wow, you guys are unbelievable. I am the biggest Apple fan ever (don't even ask me about all the Apple stuff I have bought)
If I have a very substantial amount of Apple stock it's because I believe in the company obviously. It doesn't change the fact that Apple isn't perfect.
And unless you own a successful business, make sure you know what you are talking about.
And what successful businessman in the world can school Tim Cook on how to meet the demand for the fastest selling consumer product ever? One that uses at least one component - touch screen - that has never ever been produced at this volume level before? Who in the world has met that kind of demand before and can confidently say that Cook has to get his act together? Who? What company? What product?
You're right - my business record does not qualify me to criticize him, only to admire him. My business experience tells me that anyone who criticizes a company that has managed to ship close to 200M units of anything is someone who doesn't get it. I must be sooooo naive.
So let's hear about the qualifications you bring to the table that make you so sure you're fairly criticizing him. I'm here to learn.
And what successful businessman in the world can school Tim Cook on how to meet the demand for the fastest selling consumer product ever? One that uses at least one component - touch screen - that has never ever been produced at this volume level before? Who in the world has met that kind of demand before and can confidently say that Cook has to get his act together? Who? What company? What product?
You're right - my business record does not qualify me to criticize him, only to admire him. My business experience tells me that anyone who criticizes a company that has managed to ship close to 200M units of anything is someone who doesn't get it. I must be sooooo naive.
So let's hear about the qualifications you bring to the table that make so sure you're fairly criticizing him. I'm here to learn.
Since when can you not criticize someone you admire?
And yes, you are, among other things, clearly very naive. But then again you said it yourself.
Have you learned something now?
Since when can you not criticize someone you admire?
And yes, you are, among other things, clearly very naive. But then again you said it yourself.
Have you learned something now?
Not to take sides but you didn't really say anything here. Stelligent has a point - any company that has shipped so many millions of products does not need to be told to get its act together. Again, not trying to take sides here.
As an Apple shareholder, I'm really getting tired of these supply issues. I'm not sure if Tim Cook is being way too careful about over-production or what, but if he continues like this it's going to bite Apple in the ass.
Apple is damn lucky that Motorola, RIM and Samsung have stumbled so badly with their tablets. If they hadn't you would have had tons of people flocking to them, the same as with the Android phones.
Tim, get your act together on supply!
Oh god. The same post as in the previous thread!? You just cut-and-pasted what you said before? http://forums.appleinsider.com/showt...87#post1851487
Sheesh..... there goes the discussion.....
last i heard Android is number one, the slow market share regarding Android tablets will eventually turn the corner to become number one as well. Android started slow too, and look at it now the number one mobile OS in the world. Share holder! LMAO.
Android-based smartphones activations are now outnumbering iPhone activations, but iOS still appears to be the "one mobile OS in the world? by every reasonable measure.
Apple just announced 189 million devices for the end of March running iOS for iPod Touch, iPhone and iPad. ComScore announced this weak that iOS-based iDevices outnumber Android-based devices by 59%. That?s a huge lead.
Speaking of dumb luck, we're all lucky that Apple didn't listen to Mike Dell and simply disbanded the company and distribute the cash. Otherwise, we'd all be using the Streak 7. Pfffffft
We're all lucky that Apple didn't listen to all the people who said:
Apple will not make a video iPod. Nobody wants to watch video on an iPod.
Apple should not allow third parties to create native iPhone applications. Nobody cares about third party iPhone applications. Web apps are really sweet.
Apple will not add copy and paste to the iPhone. Nobody cares about copy and paste.
Apple will not add multitasking to the iPhone. Nobody cares about multitasking.
Apple will not make a tablet. Nobody wants a tablet.
Apple will never switch to Intel processors.
We're all lucky that Apple didn't listen to all the people who said:
Apple will not make a video iPod. Nobody wants to watch video on an iPod.
Apple should not allow third parties to create native iPhone applications. Nobody cares about third party iPhone applications. Web apps are really sweet.
Apple will not add copy and paste to the iPhone. Nobody cares about copy and paste.
Apple will not add multitasking to the iPhone. Nobody cares about multitasking.
Apple will not make a tablet. Nobody wants a tablet.
Apple will never switch to Intel processors.
You forgot one.
Apple will never make a phone