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Investor update on quarterly guidance

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Re: Investor update on quarterly guidance

#21
post #9

I am surprised the stock market is holding up while the virus can have a big impact in world trade. Any guesses ?

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.

Vietnam is becoming more and more locked up from the virus every day. For example, all of the schools are closed until further notice and the borders have also been restricted as well.

Re: Investor update on quarterly guidance

#22
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.

Re: Investor update on quarterly guidance

#24
post #9

I am surprised the stock market is holding up while the virus can have a big impact in world trade. Any guesses ?

Only a few companies reported any material impact because of coronavirus. I recall SBUX, NKE, UA reporting decreased sales in the 1st quarter of 2020 during their Q4 2019 earnings calls. AAPL is the first “big” company to report an impact. Check out /NQ and /ES in 16 minutes if you want to find out, I’d wager NQ will gap down .5% and ES will gap down .25% in the ETH session tonight. As to where they go from there, I’…

You think they're going to spring back up? Why's that? The same reasons it's been flying up for the last few years, or something in particular?

Re: Investor update on quarterly guidance

#25

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 t…

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.

Re: Investor update on quarterly guidance

#28
post #24

Earlier quoted context omitted.

Only a few companies reported any material impact because of coronavirus. I recall SBUX, NKE, UA reporting decreased sales in the 1st quarter of 2020 during their Q4 2019 earnings calls. AAPL is the first “big” company to report an impact. Check out /NQ and /ES in 16 minutes if you want to find out, I’d wager NQ will gap down .5% and ES will gap down .25% in the ETH session tonight. As to where they go from there, I’…

You think they're going to spring back up? Why's that? The same reasons it's been flying up for the last few years, or something in particular?

The Fed is injecting liquidity into the market via repo operations. Remove the added liquidity, and watch the asset prices fall.

Another rate cut or two is likely this year as well, that will juice things even more.

Re: Investor update on quarterly guidance

#29
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

Re: Investor update on quarterly guidance

#30

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 t…

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.

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