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Investor update on quarterly guidance

• largehotcoffee 7y ago
  What other companies do you expect will be impacted in a similar way?
  • hyperpape 7y ago
    I had lunch with a coworker who said all our orders for Lenovo laptops are backordered right now.
  • oflannabhra 7y ago
    I’d expect anything that is manufactured in China to be in a similar situation. POs have already extended out significantly (some of our parts have more than doubled). Those estimates are at best guesses, I would be surprised if they don’t continue to slip. Manufacturing supply chains are at incredibly low levels. The second reason (slow sales in China) would really only affect things that are there, obviously.
    • spectramax 7y ago
      Totally. Regardless of whether its China or some other place on earth, almost complete centralization of manufacturing supply chain from teddy bears to cold rolled steel and everything in the middle; we're gonna have a bad time. Now if that said country offers nothing in return in terms of fairness, flat-out bans foreign business from competing, subsidizing national corporations in return for citizen information, ruled by an authoritarian regime with fascist underpinnings, and has a public health emergency; boy we're headed towards a recession until the rest of the world equips with multiple points of failure in their supply chain. I am sure this small dip will lead to unoptimization of local optima and leads us into a stronger future where there is fair competition, stronger supply chain, and efficient international trade. I am sorry to bring up political aspects, but I hope it only portrays the objective state of the situation without any prejudicial color.
  • hprotagonist 7y ago
    every pharmaceutical company, for a start.
  • guptaneil 7y ago
    You’ll see the impact even more with hardware startups, who don’t have the means to keep a stockpile of products (like a capacitor to production woes). For example, Hiome builds its products in Chicago, but we get the PCB boards printed in China and are scrambling to adjust now that our boards are indefinitely delayed. I’m curious to see what the eventual ripple effects are to the industry from this hiatus.
  • Spooky23 7y ago
    Anything PC is impacted now. February is always slow and inventory is tight. Quantities of many devices that are typically 10 days to fulfill are getting pushed back to April or May delivery. I know folks who sent teams out to clear out certain devices at retail to have a stockpile for replacements or new hires as a contingency.
  • dang-its-dumb 7y ago
    Everything. For example, my company makes sports accessories. Our products are just not shipping from port cities in China.
• discordance 7y ago
  Wouldn’t it be great if 2019 was the last time we got new stuff?
  • joobus 7y ago
    No.
  • anonuser123456 7y ago
    Uhhh no. The innovation cycle will be the only thing keeping us alive in +4C world we've locked ourselves into.
• huherto 7y ago
  I am surprised the stock market is holding up while the virus can have a big impact in world trade. Any guesses ?
  • biql 7y ago
    My guess would be people don’t see the virus as something threatening to the businesses long term, but rather as a temporary inconvenience.
  • whoisjuan 7y ago
    Well. The market is closed today. Since this is the first official guidance revision related to the virus (at least from a major corporation) you can expect to see some red tomorrow.
  • mikestew 7y ago
    I'm guessing that AAPL March call option I bought is going to take a beating tomorrow morning. AAPL saying, "we ain't gonna make our numbers" might be enough to start to drag on NASDAQ a bit. Worse, perhaps it will start some closer examinations of other supply chains.
  • Afforess 7y ago
    The trump trade policies (specifically, the China tariffs) have reduced the exposure of many US firms to Chinese goods. A lot of factories shifted to Vietnam and other SE Asian countries. Europe is already showing early red flags in their stock indexes, due to their closer ties to China. If COVID-19 spreads further throughout SE Asia unchecked, expect the SP500 to catch up with reality in a hurry.
    • jetrink 7y ago
      Would it be better or worse for China if the disease spread to countries that compete with it economically? If it helps China at all, would China be able to resist the temptation to allow infected individuals to travel to those countries?
      • 7y ago
• dano 7y ago
  The Chinese New Year, Jan 17 through Feb 8, is also a period where less manufacturing activity normally occurs. Why I know this? I had to plan our inventory and sales logistics around this period every year for seven years. We would order production so that it would be completed and shipped to us prior to Chinese New Year, or start production immediately after. We never wanted production to occur across the three week down period. I strongly suspect that large company logistics team, and certainly an expert like Tim Cook, already have this contingency in place. However, since CV has extended beyond the New Years time frame, those contingency plans will start to break down.
  • sandoooo 7y ago
    It is also the period in which deliveries out of China and Chinese-influenced countries slow down to a crawl. Basically everybody's gone home and nothing gets done for a while. Pretty obvious if you use ebay for a while. If the US ever decides to invade China, or if Taiwan decides to declare independence, it would probably happen within this window.
  • totalZero 7y ago
    One problem Apple faces is getting factory workers who went to their hometowns back to the factories. Apple had actually planned to ramp up production starting in the end of February. So this interruption is a larger hit than you might expect at this time of year. https://www.reuters.com/article/us-apple-iphone/coronavirus-outbreak-may-disrupt-apples-iphone-production-ramp-up-plans-nikkei-idUSKBN1ZR0J6 https://www.reuters.com/article/us-apple-iphone/coronavirus-...
• georgebarnett 7y ago
  The best part of this is watching very smart people discover that their highly optimised spreadsheets aren’t anti-fragile.
  • georgebarnett 7y ago
    Interestingly, a literal rerun of the hard drive motor shortage due to flooding in Thailand a few years back.
    • totalZero 7y ago
      That shortage took many quarters to work itself out.
  • icedchai 7y ago
    Buy the dip. People still intend on buying their phones, watches, and other toys, sooner than later.
  • hnews_account_1 7y ago
    Most people already know this. All estimates made within spreadsheets are based on averages. Nothing left tail is ever considered more than a small probability event. In general, they make 3 different models - bull case, bear case and normal. Even the bear case will just project a negative 2 sigma possibility at most. Nothing too much black swan is accounted for cos it'll just drag down estimates considerably and the rest of the happy-go-lucky market will keep pumping up prices while you sit and stare at your low price target that was achieved weeks ago.
• dang-its-dumb 7y ago
  I've heard that our quest for incessant optimization in warehousing and inventory management means this pandemic is catching everyone flat-footed. The McKinsey consultants of the world have pushed for more and more "turns" (how many times your inventory turns over completely in a warehouse - most orgs aim for 3+ turns a year) and minimizing your "cash to cash" cycle (you pay for manufactured inventory, you need too turn it BACK to cash QUICKLY - don't have it sitting on warehouse shelves) Now we don't have enough slack in the supply chain. Doesn't really matter much (except economically) for iPhones etc - but means a lot when you're running JIT (just-in-time) inventory management for things like hand sanitizer or medical masks.
  • Waterluvian 7y ago
    It's an interesting thought. Though I wonder if they're better off worrying about around the globe redundancy of supply and production chains rather than buffer size. Important things should be manufactured in many locations.
  • dangus 7y ago
    Then again, all those people who can’t buy these products now due to temporary shortage aren’t going to just forget that they wanted to buy a new iPhone. I believe there was a similar reason for the auto industry to come back so strongly after the 2008 financial crisis. All those people who held off on car purchases in hard times exited the crisis with aging vehicles that needed to be replaced. I would think that this sort of shortage would harm a consumables company like Coca-Cola a lot more than an “appliance” company like Apple, Toyota, or Whirlpool.
    • beachwood23 7y ago
      I'm not so sure. So much consumption these days seems to be discretionary. For your example in the auto industry, one large reason the industry bounced back was because of the Cash for Clunkers program. The US government spent $3 billion to make sure the auto industry would "come back strongly." Without similar stimulus here, I don't see how the bottom line of Apple and other companies will escape being affected.
• JonathanFly 7y ago
  Given the economic effect of health hazards of viruses like this on big companies like Apple, I wonder if Apple itself couldn't justify investing into research for treatments and vaccines as a hedge against supply line damage. Makes sense purely in terms of business, doesn't it? Near as I can tell, most of the vaccine development (outside of China) is being funded by charities right now. Drug companies were burned by Ebola investments and are not interesting in working on COVID-19. But if Apple thought they could speed up recovery by even a short time with careful investment here they'd more than make their money back. >"One would think that the industry has the reserves to jump at this challenge. But none of the four top vaccine companies has shown significant interest," says Dr Ellen 't Hoen, director at medicines law and policy at University Medical Center Groningen in Amsterdam. >Also speaking at last week's Aspen Institute event, Dr Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, said no major pharmaceutical company has come forward to say it would manufacture a vaccine for Covid-19. He called it "very difficult and very frustrating". >"Companies that have the skill to be able to do it are not going to just sit around and have a warm facility, ready to go for when you need it," Dr Fauci said. >For Covid-19, charitable donations are being used to spark pharma companies into action to find a vaccine. https://www.bbc.com/news/business-51454859 https://www.bbc.com/news/business-51454859
  • breck 7y ago
    > I wonder if Apple itself couldn't justify investing into research for treatments and vaccines as a hedge against supply line damage. Makes sense purely in terms of business, doesn't it? I would say they already do by building the best laptops, tablets and smartphones in the world, increasing the productivity of the biomedical researchers who use their products. In addition, their investments in Apple Watch and Apple Health long term I think are the future of healthcare. In 30 years I'd expect everyone will have the equivalent of their own doctor's office/diagnostic lab in their home. There won't be counterproductive mass-runs on hospitals because most things will be diagnosed at home. I think you can draw a pretty direct line from where Apple Watch is today to that future. > Drug companies were burned by Ebola investments are not interesting in working on COVID-19. I'd guess there are hundreds of companies working on COVID-19 vaccines. Here's an interesting one that was sent to me last week: https://news.ycombinator.com/item?id=22313320 https://news.ycombinator.com/item?id=22313320
• crazygringo 7y ago
  This doesn't seem to have affected the stock price today, including in after-hours trading. So either it's been gradually priced-in, or... ...is this actually expected to affect Apple once the year is over? Presumably people will just wait a couple months to buy a new phone, and below-average sales now will be matched by a wave of above-average sales afterwards? The need to upgrade your phone doesn't go away. And wouldn't all cell phone manufacturers be similarly hit these days? So it's not like switching brands away from Apple is more of an option? Just curious... happy for someone to correct me if I'm making wrong assumptions here.
  • tsmith 7y ago
    > This doesn't seem to have affected the stock price today The market is closed today (Presidents Day). We won't find out the effect until tomorrow.