Will Wednesday's Big Show Put More Spring in AAPL's Step?
Though Apple's stock still flies high above where it was a year ago, it's languished in relative doldrums since its June heyday. But nothing stirs up AAPL quite like a new product show-and-tell, and that's exactly what Cupertino is doing Wednesday. Coupled with news that Apple has worked out the kinks in its iPad supply line, can the right new toys give Apple a dash of spice?
Shares of Apple closed up 60 US cents on Tuesday to hit $243.10. However, Cupertino is still smarting from the downward spiral of the past few weeks, when its stocks took a beating along with the rest of the market.
The Dow on Tuesday recovered a fraction of what it lost after a Monday drubbing, and the Nasdaq fell nearly six points.
We'll see what AAPL does on Wednesday, when Cupertino will host an event widely expected to usher in new products related to its iPod line. That product family has been given an annual September refresh for the last several years.
To Him That Hath Shall Be Given
In the meantime, Apple appears to have straightened out the supply chain issues it faced over its iPad product. Where buyers used to have to wait for seven to 10 days between ordering an iPad and actually getting the new tablet computer, they can now get one shipped to them within 24 hours of ordering it online from Cupertino.
"I think they've finally straightened out the supply chain," Harry Wang, director of mobile and health research at Parks Associates, told MacNewsWorld. "Last week, when my friend told me he planned to buy an iPad, I said he'd have to wait a long time, but he called me back after getting to the store and said he'd got one."
That was a pretty quick turnaround of a problem that had been plaguing Apple for several months. How did the company do it?
For one thing, the problem was primarily because there was a shortage of IC and radio chips, Wang pointed out. Manufacturers had slashed production sharply over the past few years because of lack of demand.
Apple got around that because of the size of its orders.
"It's the sheer scale of Apple," Wang said. "If a supplier has secured an order for millions of units of his product from Apple, that will make Apple a much more important customer than anyone ordering the product in smaller amounts. If you look at how Apple secured NAND flash memory from Samsung, you'll see it will offer long-term supply contracts for either a guaranteed or an exclusive supply."
Apple will probably also sort out its supply chain problems with the iPhone in short order, Wang speculated. The company has been having trouble getting enough screens of acceptable quality.
"I think the problem will probably be secured before late October," Wang said. "By the end of October, we should see a smooth supply of parts to Apple, and that will let it meet demand for the all-important Christmas sales season."
Sorting out the supply problems will be money in the bank -- Apple has been hard-pressed to keep up with worldwide demand for the iPad and iPhone 4.
Oh You Know It's Magic
Meanwhile, the industry -- and Apple's competitors -- are waiting with bated breath to see what the company will announce in San Francisco Wednesday.
"A lot of competitors become nervous about Apple's plans just before it makes an announcement," Wang pointed out.
It's highly likely that Apple will upgrade its iPod selection, but speculation abounds regarding what other news it may reveal. Some expect it to unveil a new cloud-based iTunes service; others think it may update its Apple TV device; still others say the company may add 3G wireless capability for its iPod touch.
"Apple usually updates its apps in summer, and will probably have an iTunes update," Parks Associates' Wang said.
He expects Cupertino to also refresh the iPod touch, but "I don't think it'll deviate in form factor from the previous generation; I think it'll have some cool new functions. There's so many directions Apple can pursue," Wang said. "I'd guess it will offer FaceTime on the iPod, but that's a wild guess."