“Shares of Apple Computer Inc. fell sharply on Wednesday after SigmaTel Inc., a top maker of memory chips used in digital music players, cut its outlook, citing lower-than-expected sales and price cuts,” Reuters reports. “Over the last three to four weeks, prices for NAND flash chips — the type of memory used in electronic products such as Apple’s iPod and other music players — have declined more than 30 percent and are expected to drop another 40 percent over the next several months, SigmaTel said.”
Reuters reports, “‘Management cited this pricing instability as a major factor in lower customer orders,’ wrote CIBC analyst Daniel Gelbtuch in a note to clients. The lower orders could translate into lower sales of Apple’s iPod Shuffle, which uses flash memory, analysts said. Shares of Apple were down $1.09, or 2.9 percent, to $36.22 on Nasdaq in late afternoon trade after falling as low as $36.14. Shares of SigmaTel also declined, falling 14 cents, or 0.8 percent, to $17.60 on Nasdaq.”
Full article here.
Related MacDailyNews articles:
RUMOR: 2GB and 4GB iPod shuffles, 8GB iPod mini coming soon – June 29, 2005
CSFB: Apple to unveil iPod shuffle, iPod mini units with greater disk space ‘throughout the year’ – June 29, 2005
Apple cuts iPod prices to grab market share; analyst estimates 35 million iPods shipped by year end – June 29, 2005
Apple lowers price of 1GB iPod shuffle to US$129 – June 28, 2005
buy buy buy !!
Bullocks! Shares of AAPL took a dump because the alleged Motorola iTunes phone did not appear today as rumored.
Who the heck knows what’s going on??
I guess we’ll have to wait for Apple’s quarterly sales figures to come out in just a few weeks…
Happy days are here again…
Now I can grab some more AAPL. Whoohoo! {He sits, catching his breath}
From the article: “Management cited this pricing instability as a major factor in lower customer orders,” wrote CIBC analyst Daniel Gelbtuch in a note to clients. The lower orders could translate into lower sales of Apple’s iPod Shuffle, which uses flash memory, analysts said.
Basically, it looks like memory prices are dropping so fast that companies are holding back on making big orders. Businesses today live and die on just-in-time inventory management. No one – especially Apple – wants to be stuck buying $10 million worth of memory parts today and next week, the same memory is being sold for just $8 million and in a month, it’s being sold for $6 million. This is what is being referred to as “price instability.”
As a result, companies that run a tight ship are buying smaller batches. Instead of locking up a limited supply with a single big order (and limited supply guarantees the price will remain high over a long period of time), Apple is probably buying a $500,000 lot, waiting for prices to fall, then buying another $500,000 lot, waiting for prices to fall even more, and buying another $500,000 worth.
SigmaTel’s lower sales forecast may have nothing to do with how well the Shuffle is selling. Could be, couldn’t be. We’ll find out in a few weeks when Apple releases its quarterly.
Two weeks, to be exact. I can’t wait.
I agree with NewType – all indications are that iPods are selling well. And compared to last year at least doubling sales.
This is actually good news for Apple – cheaper component costs means better margins. Component manufacturers are probably facing the fact is that their production exceeds demand and as a result prices are falling.
Fact is that Apple have sold 10 M ipods so far this year. That’s 2/3 of their previous total sold. How can that be bad?
“The lower orders could translate into lower sales of Apple’s iPod Shuffle, which uses flash memory, analysts said. “
Putting the cart before the horse I think. Lower sales of the iPod shuffle could translate to fewer flash memory orders, but not the other way around. Now, if SUPPLY of flash memory was short, THAT could translate to lower sales of the iPod shuffle. These analysts can’t think straight. It’s like they have to say SOMETHING and make up the most illogical nonsense.
Good news – stock up 50c
Bad news – stock down $1
What the !@#%???
I’m going to Disneyland. The roller coasters are better since you can at least see what you’re getting yourself into before you line up.
Rumors of good news – Stock up $2.
Correctly predicted good news, a few days later – Stock down $3.
Oh well, makes it more interesting than just the ol’ standard “savings” account at the bank, determinedly earning 1.5% interest per year.