AMITIAE - Tuesday 30 July 2013
Cassandra: Apple Down, Up, Down Again
By Graham K. Rogers
Financial ReportingPerhaps the most damning report on Apple's figures, came before they were actually reported. Ken Segall (source MacDaily News) is justifiably critical of a CNN report that predicted Apple's descending fortunes, all backed up by a chart; but all "based on analyst's predictions." As many have noted, Apple often exceeds its own predictions, but is penalised when it does not reach the fiction-based expectations of analysts.
The Q3 revenue figures were at the top of the band that Apple had predicted. Also surprising many were sales of iPhones: 31.2 million (26 million a year before). Sales of iPads were down at 14.6 million (17 million), while the figure of 3.8 million Macs (4 million) is encouraging when one examines the rest of the PC industry, with sales of PCs falling 11.4% in the 2nd quarter this year (BBC Business News). Cheaper is not necessarily selling more these days.
As expected, a number of commentators were critical of the figures and the usual Apple is doomed meme appeared. With cash reserves of over $117 billion, several other companies that rely on technology may well fall first. Apple shares rose slightly, fell, then rose again, to stand at (as I write this) $447.79.
Wall Street is the worst judge of Apple's potential as the analysts want instant gratification. While they are quick to castigate Apple, they are relatively quiet about other companies with serious problems, and almost silent on mega-billion losses of banks.
A reliable commentator on Apple, and one who is not afraid to call out wrong reporting, Philip Elmer-DeWitt recently produced his score-card on analysts' performance. While better than some previous rounds of predictions, the evidence presented here suggests that the Wall Street analyst is the last person you want to trust with your money as far as apple is concerned. Philip Elmer-DeWitt also wrote about the way that Wall Street handles reporting on Amazon compared with Apple. For those used to dealing with facts and logic, what he reports (along with the comparison charts) seems to come from a Looking Glass world. Apple is a long-term relationship, not an analyst's wet dream.
Bob MansfieldMonday morning saw a host of Tweets and headlines with the news that Bob Mansfield had been "removed from" his position as Senior Vice-president of Technologies at Apple (previously SVP Hardware Engineering). One of his notable appearances was in a video on the 17" MacBook Pro in which he discussed battery technology.
The immediate suggestion from many of the first in the rush to create hits, was that something was wrong. Many made comparisons with the removal of Scott Forestall from his position as Senior Vice-president of iOS Software. One part of that early demonstration of Tim Cook's ruthlessness (when necessary) was contained in the confirmation that Bob Mansfield was to stay - although he had earlier tried to retire - and in the compensation package that was to be paid. Some sources put this at $85.5 million, although most is in stock: the salary is said to be $805,400 (Businessweek).
Unlike Forestall, there is no "them and us" with Mansfield. While the former Senior Vice-president of iOS Software was said to be a divisive figure - one of the main reasons for his departure - Bob Mansfield has had no hint of friction stick to him. This was confirmed by a number of sources late Monday who refer to Mansfield as universally loved.
Several reliable Apple commentators made the point that the removal from the position of Senior Vice-president had none of the trauma that Forestall's change of position had entailed: Mansfield really was reporting directly to Tim Cook. In an interview with Emily Chang on Bloomberg TV, Om Malik analysed the event and pointed out that there was no longer any need for Mansfield to be jetting off to China or other markets. Mansfield wanted the move which would allow him to focus on the special project (or projects) that were in the pipeline.
Malik also mentioned that commentators choose to believe negative comments about Apple [His comments at the end of the interview concerning Zynga are worth considering]. The main points that were made in the interview may also be found online in an item in which Om Malik discusses this in the context of other personnel moves within Apple.
A reminder here that, according to many critics, Apple apparently does not innovate.
Problems at PegatronOver the last year or two Apple has been at the receiving end of much criticism concerning perceived labour problems at its factories in China. Although some of the initial reports (based on the comments of Mike Daisey) were later discredited, the situation was not perfect and Apple has made a number of changes in addition to the regulations it already imposed on its suppliers.
The main source of components in China was from the Foxconn factories in a number of locations, but there were moves made to spread the manufacturing to other companies. One of these was Pegatron. Despite Apple's guidelines and checks which may be accessed via its Supplier Responsibility pages, China Labor Watch (CLW) has uncovered a number of abuses at Pegatron plants. In a comment on the report (one of many that can be found online), Lex Friedman outlines the allegations and Apple's immediate responses.
As in the previous reports, that particularly the New York Times made so much of, Friedman points out that Pegatron is also a supplier for "Google, Microsoft, Hewlett-Packard, and Dell. None of those companies - including Apple - responded immediately to Macworld's request for comment on CLW's report" As with that previous round of allegations, most of the reports available online highlighted Apple's involvement, but not the other companies.
Friedman also tells us that although Apple had been working with CLW, these latest allegations were news to the company: in other words CLW has released the report without giving Apple a chance to act on the alleged abuses, implying that CLW may be more interested in publicity against Apple than rectification. We seem to remember Greenpeace making a lot of noise (while burning fuel for generators) about Apple in San Francisco in 2007.
In another report on these problems at the Pegatron factories, an Associated Press article in the Sydney Morning Herald, Pegatron said that "it would investigate the matter and would take immediate action to correct any violations of Chinese labour laws and its own code of conduct. . ." suggesting that the problems are not caused by company policy but more likely by local management at the factories."
Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand where he is also Assistant Dean. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.
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