Friday, August 3, 2018

Apple Suppliers Not Out Of The Woods

Apple's (NASDAQ:AAPL) earnings reported this week. The report and conference call said two things about their inventories which have implications to the food chain of their suppliers.

On the one hand they said channel inventory was at the low end of their 4-6 week target. That was lower than the previous quarter. If there is demand Apple will have to meet that demand and as a bonus drive sales by replenishing the under-inventoried channel.

That's bullish for Apple.

On the other hand Apple's in-house inventories jumped once again.


Jun Sept Dec Mar Jun

Q3 Q4A Q1 Q2A Q3E
Inventory 3146 4855 4421 7662 5936
Year-over-yr 71.8% 127.7% 63.0% 163.3% 88.7%

Inventories are up huge year-over-year. Some of that may be Apple charging to build components in-house, but that's also a negative story for suppliers.

Apple has also said they bought inventory ahead at good prices so they have stock at lower prices.

Either way you look at it if their inventory growth is far outpacing the revenue growth you have to dig a little deeper before you fall in love with an Apple supplier.

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