Experts Predict Lower Apple Profit In Wake of Japan Supply Strain

Experts Predict Lower Apple Profit In Wake of Japan Supply Strain

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Apple could announce higher sales, but a lower profit margin due to increased supply costs, analysts warned ahead of Wednesday’s scheduled quarterly financial report. Profit margins for the tech giant may slip to 35 percent, down from 38.5 percent in December, one San Francisco expert projects.

A 13 percent jump in the cost of 64GB flash memory is just one area of concern for Apple watchers. The tech giant is widely viewed as the world’s largest consumer of flash memory with its iPad, iPhone, MacBook Air and iPod all relying on Japanese memory suppliers.

Noting demand has often outstripped supply, Bloomberg quotes an Illinois-based investor concerned about how Apple’s ties with Japanese suppliers will effect sales. Flash memory, glass for touch screens and resin needed to attach chips all originate from the island nation still recovering from the March 9-magnitude earthquake and following tsunami.

Another possible dent in Apple’s quarterly profits could be the higher prices it now pays to acquire needed parts, an ISuppli analyst told the publication. Earlier this year, Apple announced it would spend billions to obtain supplies of what the company termed “strategic components.” In the past, Apple has also inked deals ensuring flash memory.

Despite the concerns, an analyst survey found most expect quarterly sales will increase 73 percent to $23.4 billion.

[Bloomberg]

  • BMWTwisty

    Apple had the foresight to purchase components long ago. Those other companies that didn’t are in way worse shape than Apple, and their profits – if any – will be impacted more adversely than Apple’s.

  • robert p

    Who cares? First, I am sure Apple insured its supply and pricing long ago.Does anyone really think that any company will risk losing Apples business in order to make a short term profit by price gauging ? Second, even if there are disruptions, the profits will come later at even a greater clip as pent-up demand is satisfied.

  • OEB

    Well. The results were posted today… and guess what? The ‘experts’ were wrong again.

    A record breaking 6 billion profit in one quarter.

    Lesson: Experts are useless soothsayers much like ‘analysts’.

  • OEB

    Well. The results were posted today… and guess what? The ‘experts’ were wrong again.

    A record breaking 6 billion profit in one quarter.

    Lesson: Experts are useless soothsayers much like ‘analysts’.

  • Bob Forsberg

    Hype. Cost of product is contractually predetermined and locked in. Not a problem today that might exist in the future is availability of components.

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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