But that’s largely because mass production isn’t due to begin until May.
From Mark Gurman and Debby Wu’s “Apple’s Supply Chain Woes Linger Even as China Recovers” posted on Bloomberg News:
Apple kept its business rolling through the coronavirus pandemic this week by launching a new iPad Pro and two new Macs. But that doesn’t mean its supply chain is in the clear.
Deliveries of the new products will begin arriving on doorsteps next week. However, production of those devices likely started in early January, before the worst effects of China’s virus lockdown in February, according to people familiar with Apple’s supply chain.
With a fresh round of supplier factory closures enforced by Malaysia, and the virus disrupting operations in much of the rest of the world, the iPhone maker’s supply chain has not fully recovered yet.
Apple’s next flagship iPhones, with 5G wireless capabilities, are still on schedule to launch in the fall, although that’s partly because mass production isn’t due to begin until May, said the people.
My take: From where I sit, still waiting for the tsunami to hit, May doesn’t seem that far away.
Apple has the strongest supply chain management team in the world. They are more prepared than anyone. For example, “injured” supply chain partners may need more than usual upfront cash infusions. Guess who has ~$200 billion in cash? Do they leverage that into a discount? Perhaps. More importantly, though, they have all the tools and relationships across the world to keep their products shipping. Now, more than ever, Tim Cook’s move into Services is the high margin revenue generator needed to soften near term hardware shortfalls.
“That’s a relative statement, Jerry.”
When it comes to the supply chain, no other company I know of, and certainly no other company of Apple’s relative size, is as nimble.
Bets are being laid on the future, and the example yesterday of AAPL being discounted heavier than most is a classic example of short term thinking. Yes, some folks can make money in the short term off of the short-term knee-jerk reactions of others (ironically, that includes long term holders of AAPL, who are doing nothing but holding onto their shares, thanks to Apple’s deep pockets and willingness to invest in a huge self-acquisition).
But the smart money is aware of Apple’s enviable position for future value appreciation, and is taking advantage of this unprecedented opportunity to increase their AAPL holdings.
That used to tick me off, because we needed to sell at those low prices. But when Apple began it’s massive buyback program, that changed, as I finally came to realize that, in terms of percentage ownership of Apple, the buybacks were actually keeping us whole!
It’s possible, even likely, that countries which have managed to keep their numbers of infected down, like China, will see a second wave of illness sweep the country, this time coming from the outside. The true tidal wave that is COVID-19 hasn’t yet made an appearance, IMHO, but is silently building under the surface, after which it will wash back and forth around the world.
But a nimble company, even one as big as Apple, has a far better chance of surviving intact. The same is true of a nimble country. Our reaction to COVID-19 will be a true test of America’s – and Apple’s – nimbleness.
I think China will be paralyzed, manufacturing wise, for a much shorter period of time than the US.
How is it that the US is warning about half of California getting COVID-19, I.e. 25. million cases, when China only has 100,000 reported cases so far? Is it just testing vs actual infections?
I too, am puzzled that half of Californians are going to get Covid-19. Governor Gavin Newsom asked Congress for $1 billion in federal funds to support California’s medical response to the coronavirus. In a letter to President Trump, Newsom wrote that the state predicts more than half of Californians will become infected with COVID-19, or 25.5 million people, over an eight week period.
Meanwhile, I am watching from my quarantine quarters caravans leaving town. There is so much craziness. Students partying in Florida when the order is “quarantine.” With all its national parks (now opened free) I wonder how many Californians are heading to them?
Maybe half the state assumes we don’t actually do all this. Doesn’t make a lot of sense to me.
People partying in Florida does really piss me off.
Governor Gavin Newsom somehow came up with this “worst case” scenario, but I personally think it’s unnecessarily extreme — just as it seems like states, country and the world-at-large are extreme concurring to commit economic suicide.
Consider this thought; what if all of these sicknesses and deaths didn’t have a virus name/identity attached to them, yet were just added numbers on the everyday stack of people dying from flu like symptoms, pneumonia and other respiratory problems. Would we even have noticed? Would we have panicked? No doubt it’s an additive number, but would that increased number be an alarming one. Much akin to any odd increase in automobile deaths year-over-year would be, for example. Would that be as alarming to us or not?
I understand that I risk being “naive to numbers” to even assume this notion, but are the numbers that grandiose of an increase?
In other words how many times have people been sick enough to require hospitalization ending in death that just simply didn’t have a virus name attached to it, but on death certificates we’re deemed as death due to “accute natural respiratory causes”.
Get my drift? If this virus didn’t have a name attached to it, would the increase in deaths cause us such worldwide wide alarm?
New York’s Governor Cuomo now wants the same.
I really think the distancing — the comprehensive washing of the hands — the suspension of gatherings, etc. will probably ALONE have the desired effect that’s needed. But the “shelter in place” concept is just going overboard, AND when does it properly end?
When we’re economically in ICU?
https://en.m.wikipedia.org/wiki/List_of_epidemics
What happens when you let science go? You will default to the madness of religious fervor and the power hungry craziness that can result from it.
So no. Please don’t put your head in the sand and claim ignorance. It only sets back human society and civilization. Everyone should do their part. Be safe. Be kind.
I do my level best to not be a “stick my head in the sand” kind of fellow and I wholly embrace the need and logic of the applied sciences already critical to our world’s survival.
I guess my plea here is crying out for a better balance of damage control, both that of health and economics.
Given the primary mode of transmission is exhaled droplets, does not the social distancing — handwashing/sanitizing — gathering suspension — travel restrictions efforts all amount enough for a bulwark of what’s truly needed to arrest the spread until a vaccine/cure comes along — which assuredly will come along?
I’d love to see what blessings just the simple fervor of great handwashing etiquette will bring our civilization.
The world has suffered already with a viral noose being placed around our collective neck.
Need we be the ones to pull it tighter?
Where’s the proper balance?
“…does not the social distancing…amount enough for a bulwark…The world has suffered already with a viral noose being placed around our collective neck. Need we be the ones to pull it tighter?“
What you keep leaving out is (1) we don’t know how deep the hooks are already set, not just in this country, but worldwide, (2) the insidious essentially invisible nature of disease transmission (for example, and there are many, with kids home, and kids being kids, they will intermingle at every opportunity, and will thus serve in their traditional role of disease vector to their parents, because many won’t appear to be sick), and (3) what happens when health capacity can no longer mitigate the death rate?
So the short answer is – yes, social distancing can buy us time, if it’s thorough enough. But the time being bought has to concentrate like a laser beam on increasing our treatment capacity, and not just for the US. This “war” is international in scope and longer term than most are presently thinking. China’s risk now is coming from outside its borders. Soon it will be the same here, as the tidal wave inundates the world with “Typhoid Mary’s”.
“I understand that I risk being “naive to numbers” to even assume this notion, but are the numbers that grandiose of an increase?“
The problem is that we don’t yet know the numbers. I’ve heard estimates that the numbers of known infected are off by an order of magnitude. That’s because this is a far more insidious disease than we’ve had in a long time. Think Typhoid Mary times 10. Yes, many folks recover. But I heard an estimate last night that, of those on respirators, only 50% survive. And we’re quickly running out of respirators.
That’s why the lockdown is so critical; we need time to build up our medical response capacity. That alone may be the difference between a 1% die-off and a 3-5% die-off.
And what about 3rd World countries, where high tech isn’t widely available? This disease is likely to rip through them like a fist through wet tissue-paper.
Then I read last evening a news article about a frantic cancer patient whose scheduled surgery was delayed to the virus restrictive policies. So what I am hearing from some peers must be correct about “their” scheduled medical exams being delayed.
It seems to me that an unintended consequence from all the attention to the virus may lead to increase deaths and illnesses among others. I am empathetic to what Kirk is denoting in his post.
“It seems to me that an unintended consequence from all the attention to the virus may lead to increase deaths and illnesses among others.“
I agree that it’s a consequence. I don’t agree that it can be categorized as an “unintended consequence”. From wikipedia:
“The idea of unintended consequences dates back at least to John Locke who discussed the unintended consequences of interest rate regulation in his letter to Sir John Somers, Member of Parliament.“
That is, in unintended consequences, the consequences are unexpected. Not so with a pandemic, which predicts exactly these circumstances.
Ignoring those predictions is what has gotten us into this mess.
Me? I’ve started wearing paint masks. They are plenty good enough for the kind of droplets that are contagious.
Nearly 3 months into this and worldwide deaths (overwhelmingly amongst an easily identifiable demographic) are a pittance compared to natural death rates. In China alone the average death rate (from all causes) is 25,000/day.
From Wikipedia:
As of 2020, for instance, the CIA estimates that the crude death rate globally will be 7.7 deaths per 1,000 persons in a population.
Ergo, of 6.6 billion populace 140 thousand will die daily from all causes. So far, and yes the rate is increasing rapidly, after nearly 3 months there have been about 10,000 deaths.
We are hugely distant from the natural rate.
“We are hugely distant from the natural rate.“
That’s because of the extreme measures China took to enforce “social distancing”. But the barn door got left open. We see the results in Italy.
We literally haven’t seen anything yet. We’ve only seen the water beginning to draw back from the beaches.
Far better to prepare for a tidal wave that fizzles than to continue playing on the beach. If the tidal wave doesn’t materialize, business will return to normal relatively quickly.
What we see in Italy is a very old demographic full of those with respiratory problems – COVID-19’s favorite target.
Be that as it may I’m thanking my lucky stars for the great State of Idaho. Idaho is not in lockdown and at less than 30 miles away my partner and I are going out to dinner tonight.
I’m so glad I moved away from the craziness that is California (my home for 35 years) way back in 1991.
Of course, the model that got everyone, including the Trump administration, spun up is the one from the UK.
This would explain why COVID-19 spread so quickly in northern Italy. Can’t find the link right now, but one official with WHO pointed out last week that COVID-19 was spreading fastest among family (network) members.
As members of a network are exposed, and survive, the number within the network susceptible to COVID-19 declines, limiting future growth.
My own extrapolation of the article is that the more below age ~65 (death rate less than 1%) that are exposed the faster COVID-19 retreats into background noise.
Thanks for the link David. Very informative.
China took very strict measures and the infection rate in Wuhan was held to about 1%. With aggressive testing and a quarantine for anyone found infected they hope to prevent any flare up of the disease.
In a week or two or three we should see test kits available here at the rate of more than five million a week. By the end of April we could be testing more than a million people a day. The point would be to find those infected and have them stay isolated for a few weeks. This is especially true for those showing no symptoms.
If you know everyone who has the virus and if you keep those people isolated for two or three weeks that stops the disease in its tracks.
Apple’s fall iPhone production ramps are miracles.
There is no need to panic. With the virus spreading at 4% daily*, we need to keep the restrictions in place. That has economic impact and will impact Apple’s complex supply chain.
* 6% if we remove China and South Korea, where the virus seems to be contained for now.
The best we can do, I think, is observe the rate of change (1st derivative) in each sample space (national reports).
You called that correctly. Since when can we rely fully on data from the CCP, especially relative to this flu outbreak originated from Wuhan.
Yesterday, mid-day, with the price of AAPL around $249, I sold covered calls that expire *today* with a strike price of $260. For $2.40 / share!
That seems insane. I sold something yesterday for $2.40 / share that was incredibly likely to expire completely worthless one day later? (And frankly if the price miraculously shoots up about $262.4 today and my shares get called away, so be it. Seems a good price to gain some safety given where the stock has been.)
I plan on checking the price again next Thursday, and if volatility is causing the options to again be sky-high, I will rinse and repeat.
To me the most important stock metric of them all is the intraday low. This week’s intraday low seems to have stabilized in the $238/$240 range.
Any dip to that level and I’m a buyer, using my deep in the money Call Spread strategy.
“Maybe I am overly optimistic…I am cautiously optimistic that Apple has tested its lows and that low area is $240.”
Well, Jerry, you were indeed overly optimistic. AAPL dropped below $230/share after failing to hold the line at $240/share a half hour before the close.
It is now officially back to the previous high it made in September, 2018.
“…I keep seeing attempts to drive Apple below $240 a share but Apple just keeps pushing back.“
I can’t say where AAPL will fall to over the span of the present emergency. All I can say is that Apple is very well prepared to weather the storm, and that plenty of folks get that salient reality. Hence it’s resilience.
Apple has little relative debt, and most of that is low interest debt. And the potential is growing for acquiring literally zero-interest debt. And it has about $300 B in cash and equivalents.
On top of that, it has arguably the most nimble production capacity the world has ever seen. It has an extremely loyal customer base. It had a process in place for continually growing its installed base. It is practicing Continual Improvement on a massive scale.
I could go on, but I’m almost literally preaching to the choir….