I implore and ask you not to read the text further if you are sure that Apple never lies, and its top managers are holy, because the company’s shares are listed on the stock exchange. Do not destroy your usual world, do not let doubt and sadness into it, let the rainbow unicorn continue to gallop on the lawn near your house, and thoughts will be light and empty. Stop.
For everyone else on today’s menu, simple dishes are another failure of Apple’s plans to increase sales with the iPhone 11 line, a greater divergence of planning from reality, and Tim Cook’s prospects of losing in court to Apple shareholders. But let’s start simple, namely numbers. Let me remind you that Apple has always boasted of its own sales, showed how the iPhone share is growing and how successful the company’s top management is, and most importantly, perspicacious. In 2015, iPhone sales reached their peak, for several years the company tried to return them to their previous level, but to no avail. At the end of 2018, when a further decline in sales became apparent, Tim Cook and other executives made the curious decision to refuse to provide data on piece sales of any devices. It was a response to the failure of Apple’s strategy, when the company was unable to even maintain a stake. Estimates from external sources have always favored Apple, and this decision was correct, the real drop in sales became more difficult to assess than before.
For example, we can look at Apple’s 2019 sales from Canalys. This is the only manufacturer in the top five that lost the market, minus 7% yoy, and a drop in absolute numbers is also visible.
Considering that the 2019 market was not the most calm, it can be noted that the drop in Apple and iPhone sales directly stems from the high cost of this product, a rather large gap in cost with Android smartphones that have the same or a greater set of capabilities. All of 2019 hasn’t been a good time for the iPhone.
Nevertheless, every time he spoke about iPhone sales, Tim Cook emphasized that everything was going well, sales were in line with expectations. In the fall of 2018, the company launched a new line of iPhone – Xr, Xs, Xs Max. In November 2018, Tim Cook, on a call with investors, said that sales are in line with expectations, everything is going according to plan. The picture, drawn by the top manager of Apple, was beautiful, nothing could stop iPhone sales. But the reality was completely different, and everyone who sees sales on the market, as well as the perception of new products, knew about it.
In January 2019, Apple is taking an unprecedented step, officially announcing that it is revising its first quarter sales forecast. The company initially reported revenues in the $ 89 billion to $ 93 billion range, but a new forecast shows it will not exceed $ 84 billion. The main reason is weak demand for the iPhone. Surprise!
Various funds and individuals invest in Apple shares, a warning issued in January led to the fact that in just one day the company’s shares fell by 10%. Investors believed that Tim Cook deliberately lied to them to support the opinion that the iPhone is in demand. In America, class suits are common where they come from an unlimited number of victims, and this is exactly what Apple faced. The lawsuit states that Apple has cut orders for iPhone production in the days following the call with investors. It is also circumstantial evidence that Tim Cook lied to investors.
For a case to go ahead, a US federal judge must consider the parties’ arguments and then decide whether it can be tried in court. Here is the judge’s opinion on the case: “Unless some natural disaster or other cause, it just isn’t plausible that [Tim] Cook didn’t know that demand for the iPhone … was falling just days before the production cut.” The judge ruled that the case goes to court, where Apple’s lawyers will try to defend their boss. But I share the opinion of Judge Rogers (full name is Yvonne Gonzalez Rogers) that it is incredible to believe that Tim Cook has no information.
In July 2019, there was another indirect confirmation that Apple miscalculated that year’s lineup. Samsung’s second-quarter financial report announced that the company would receive a one-time payment of KRW 800 billion (approximately $ 683 million at the time). This is a fact that is reflected in the company’s financial statements.
The explanation given in different sources sounds simple and logical. Samsung Display’s main customer is Apple, which has bought OLED screens for its flagships. Apple initially planned a certain volume of purchases, a price was formed for it. Failure to fulfill the volume led to penalties, this is a common practice in the market. And these penalties were reflected in the Samsung Display report, even if Apple was not named directly.
Lyrical digression – there are fans of different brands in the world, but Apple fans from the village of Eplovka differ in that they cannot admit obvious, logical things. Until Apple themselves admit that they paid Samsung, this is all a lie! What’s in people’s heads? The answer is obvious – applesauce! Don’t take this as an insult, just a statement of fact.
What happened to the “successful” sales of the 2019 line? We see reports from various companies, Apple continues to lose market, and this is a fact. Especially the comment that this is an unfair comparison delivers, since the piece drop in sales is not at all important, you only need to look at the money, everything else is secondary. Inventing your own metrics to assess certain events, juggling them is a sign of a high level of controversy.
But in July, another event happened that brings a smile and makes you laugh. Samsung released preliminary data for the second quarter of 2020 and again indicated that Samsung Display will receive a one-time payment, but now in the amount of one trillion won ($ 835 million at current exchange rates). Let me remind you that last year the payment amounted to $ 683 million. There is some progress here, due to the fact that the fines have increased, which means that the supplier, who could not take the agreed volume, did not collect more screens. And who could it be other than Apple? I have no options, as the only customer with this volume of orders for Samsung Display was Apple. You can use any verbal tricks, but the fact remains that this is another failure in planning your own purchases, production, which is directly related to rather sluggish iPhone sales (the numbers prove this and clearly show).
In the lawsuit against Apple, investors received additional arguments, as Apple’s payments to Samsung are further proof that the company did not have the sales it was hoping for. Refusal to purchase is a demonstration of the weakness of iPhone sales, it is impossible to argue with this.
Financial results for the second quarter (for Apple this is the third quarter) will be announced on July 30. It is curious to see how the company will paint its achievements artistically, hide the weakness of iPhone sales against the backdrop of a pandemic, closed stores and other problems. In the previous quarter, we managed to do this in full, the feeling was that the company did not feel the global crisis in any way, which in itself is ridiculous and shows the invention of financiers, they are really great fellows.
In the end, I can say the following – how Tim Cook lied to investors will be discussed in court, there will be a lot of internal documents of the company that will clearly show the true state of affairs inside Apple. The process will be long, and by that time we will see another decrease in the company’s share, since in the current situation the most expensive smartphones on the planet are simply not needed in the market, the demand for them is noticeably sagging. This is not only a matter of cost, but of positioning and differentiation from competitors. The fact that Apple is going to give up even the included charger is a desperate attempt to make more money so as not to show a significant drop in sales. But while everything is going according to plan, sales are declining, you have to pay forfeits to Samsung and buy screens for the iPhone more and more expensive. Alternative suppliers LG and BOE cannot provide quality for displays, and for Apple the situation is at a standstill.
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