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Investor update on quarterly guidance

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Re: Investor update on quarterly guidance

#31

Post by sandoooo »

dang-its-dumb wrote: post #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 t…

Building slack into the supply chain would be a very inefficient way to stockpile for emergencies, compared to actually stockpiling for emergencies. As you've said, it would make no sense in the case of the iPhone. The McKinseys of the world are absolutely right about this.

The problem is that the old system created a positive externality (coincidentally storing a bit of inventory for emergencies, though inefficiently and in no way planned) that the new one doesn't. It's the sort of thing that should be fixed by government incentives.

Re: Investor update on quarterly guidance

#33

Post by sandoooo »

dano wrote: post #15

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 wee…

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.

Re: Investor update on quarterly guidance

#34

Post by breck »

JonathanFly wrote: post #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…

> 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

Re: Investor update on quarterly guidance

#35

Post by JonathanFly »

breck wrote: post #34
JonathanFly wrote: post #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…

> 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 Appl…

>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

Yes, the BBC articles mentions they are mostly smaller companies funded by things like the Bill and Melinda Gates Foundation. This feels like a coordination problem given the size of the economic damage from stuff like this.

Ideally it would be governments picking up the slack, but if we are so inefficiently allocating money to vaccines that have such big impacts on Apple's supply lines, there's a business case for them hedging with investments of their own.

Re: Investor update on quarterly guidance

#37

Post by hnews_account_1 »

dang-its-dumb wrote: post #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 t…

There is really no other way to improve supply chain efficiency in real time than to bring everything as JIT as possible. Inventory turnover is an entirely different concept. It is dependent on the industry. Hand sanitizers and such have a very high turnover already (they're what the marketing students call fast moving consumer goods). It's true that they squeezed a shit ton of slack from it over the past few decades, but demand for these products has always been high and markets have consistently kept opening up everywhere to meet it.

So you can have JIT implemented in a slow turnover industry - imagine ferrari having a JIT assembly line that gives you your vehicle in less than a day after you place your order - but it doesn't make economic sense.

That said, introducing slack into the industry is not useful. What you need is increase in inventory stockpiling. And as any good financial analyst would tell you, an increasing stockpile number either implies a big future order coming through or that your product isn't selling. With consumer staples companies (the GICS sector term for companies that manufacture fmcg products like toothpaste and hand sanitisers), there is hardly a new market opening or some giant ass retailer coming out of nowhere to place large orders. So stockpiling almost certainly means slowing sales.

Re: Investor update on quarterly guidance

#38

Post by hnews_account_1 »

huherto wrote: 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 stock market is very divorced from the economy and global events at present. The money faucets have been pumping non stop to stopgap all liquidity shortages within financial trading. As long as you grease the wheels, the market won't collapse.

That said, the coronavirus has also been ignored as a whole until now. AAPL's downward guidance is a big, big fucking deal and is almost certain to cause a short term impact on prices. However, it'll also be transitory much as the rest of the shit is.

Re: Investor update on quarterly guidance

#39

Post by hnews_account_1 »

georgebarnett wrote: post #16

The best part of this is watching very smart people discover that their highly optimised spreadsheets aren’t anti-fragile.

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.

Re: Investor update on quarterly guidance

#40

Post by crazygringo »

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.

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