Thursday, October 18, 2012

Why is Apple Inc. (NASDAQ:AAPL) Facing Supply Constraints that are affecting its Stock? Foxconn Explains

Analysts have recently reduced estimates for Apple Inc.(NASDAQ:AAPL)’s December quarter and stock prices are lower than expected. This is due to supply constraints, as a Foxconn executive has confirmed, because the company is facing numerous issues in manufacturing iPhone 5’s to match the growing demand.
The exec has stated that it is by far the toughest device to be ever assembled by Foxconn. The light and sleek design is complex and technicians are taking time to learn the manufacturing know-how. But then, again the productivity is showing improvements with each passing day.

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Hon Hai is implementing measures for better productivity and also address issues such as scratches on the metal casings of some newly shipped iPhones. A quality check mechanism is now in place to reduce and eliminate the chances of damage. However, a new coating material is used in the iPhone 5 that makes it vulnerable to scratches.

Initial predictions from Wall Street showed that Apple will sell more than 50 million iPhones in the last quarter as compared to 37 million in 2011. But due to the company’s failure in keeping up with the demands, analysts are slashing estimates. Shareholders need not worry because chances are that potential customers will not switch brands after waiting this long. Sales will be late rather than lost, barring a few isolated cases, which are being attributed to price cuts of iPhone 4 and 4S and Samsung’s Galaxy S3’s market presence.

Shares of the AAPL have lost about 10% from its all time high last month.

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