Apple “Screws” Suppliers Over Store Closures Many Left With Millions Of Dollars Worth Of Stock
As Apple moves to reopen their stores, several suppliers were without warning told their supply contracts were suddenly cancelled, with some suppliers now hawking goods originally destine for Apple stores worldwide to local retailers.
Among those suppliers suddenly axed were those who had contracts to supply Apple with cable and wireless chargers, portable power banks, as well as suppliers of cases and sound gear.
Among the brands effected are Bose, Belkin, Ultimate Ears and Cygnett.
Last year local Australian Company Cygnett pitched their range of products to Apple in Silicon Valley.
An order for 3 models of Cygnett Power banks were ordered by Apple, the price ranged from $150 to $295.
The order for 20,000 units was suddenly cancelled despite the goods being manufactured and were packed ready to be shipped to Apple stores.
The cancellation came as CPVID-19 first broke out in China where Apple ended up closing all their Company stores.
Orders were also cancelled on Bose and Belkin.
A Bose source told ChannelNews that orders worth several million dollars had been cancelled.
Apple in mid-February announced that its financial guidance for the March quarter would fall short due to the COVID-19 outbreak. During the January earnings call, Apple said it expected to see revenue of $63 to $67 billion in the March quarter, but that is no longer a goal the company will be able to meet.
Paul Santoro, CEO of Cygnett told ChannelNews that despite having a written email order confirmation from Apple the cost of taking legal action against Apple in the USA was not worth it. “We have now shifted the stock” he said.
The high-quality custom designed and built Power banks were recently offered to Australian retailers.
Recently Apple cited lower customer demand in China and constrained iPhone supplies worldwide as the factors leading to lower than expected revenue.
Apple stock has been fluctuating wildly due to uncertainty caused by the spread of COVID-19. On February 16, Apple’s stock hit an all-time high closing price of $327.20, but by February 28, it had dropped as low as the $260s. As of March 2, it was back up to $298 a share, but by March 13, it had fallen again to $259 a share, dropping further on March 25 to $245 a share. Today it is sitting at $338.20.
HSBC analyst Nicolas Cote-Collison believes macroeconomic conditions going forward will act as a headwind for Apple however he is bullish about the services segment.
“The pandemic will, in our view, create more demand for health-related tools and Apple could play a large role in addressing that demand,” Cote-Collison wrote in a note to clients. The analyst also noted that healthcare is “the first or second largest sector in the economy” depending on the country, providing a large potential market for growth.
Analysts claim that ‘It seems that the all-out growth of the mobile hardware industry is officially over.
Mobility around the globe will continue to average up over time, especially as the internet grows in emerging economies, but the up years will get increasingly offset by the down years in the next decade.
The last year and a half have been a sampling of that. After Apple revenue surged 16% in fiscal 2018 (which ended September 2018) driven by higher iPhone revenue, Apple’s top-line trajectory has started to flatten.
In fiscal 2019 sales declined 2% (due to a 5% tumble in device revenue); and while revenue in the first half of 2020 was up 6%, the balance of 2020 will likely be a mixed bag. Demand in the smartphone and wearables markets is expected to decline, offset by a bump in sales for iPad and Mac due to shelter-in-place rules and the surge of working from home.
Motley Fool Analysts claim, the company’s mobile hardware business is still a cash-generating machine like no other, and in the next decade, cloud-based services should be a big growth story.
Apple’s services segment is more than respectable, growing 17% in the first half of fiscal 2020 and accounting for 17% of total revenue.
Analysts also claim that Apple cloud-based services will further propel mobility and digital transformation in the decade ahead, the fact that Apple’s services segment — which had a huge $26.1 billion haul in the first half of the fiscal year — was able to grow 17% year over year speaks volumes to how massive a movement this is.
Retailers will shortly get an insight to what is new from Apple in 2020.
Apple says their online Worldwide Developers Conference event due in mid-June, will be “packed with content” for consumers, press, and developers alike.
“WWDC20 will be our biggest yet, bringing together our global developer community of more than 23 million in an unprecedented way for a week in June to learn about the future of Apple platforms,” said Phil Schiller, Apple’s senior vice president of Worldwide Marketing.
“We can’t wait to meet online in June with the global developer community and share with them all of the new tools we’ve been working on to help them create even more incredible apps and services. We look forward to sharing more details about WWDC20 with everyone as we get closer to this exciting event.”
Though there will not be a physical event in San Jose, Apple will hold an online keynote to unveil new software (and perhaps hardware) products. We are expecting Apple to unveil iOS 14, iPadOS 14, macOS 10.16, tvOS 14, and watchOS 7.