What Does Apple Inc. Want To Do With iPhone Supply Chain And Cash Reserve?

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It’s said that Apple Inc. intentionally used to low-ball its quarterly guidance to beat the analysts estimations. For straight 34 quarters since April 2003, Apple Inc. crushed marketers expectation over its earnings per share for the quarters. But after the arrival of Tim Cook as CEO, the company started issuing more realistic quarterly guidance, which has been considered as one of the risky decision for it.

Would Apple Inc. Beat Analyst Expectations In Q2 Fiscal 2013?

Considering a new estimate from Jefferies & company analyst Peter Misek, Apple Inc.’s earnings for second fiscal quarter of 2013 wouldn’t be impressive for its shareholders. In a note, Misek slashed the company’s stock price target from $500 (what he predicted earlier) to $420. In simple words, Apple Inc. could miss its own guidance for Q2 2013. However, the Cupertino-based company could generate a revenue of $41 billion in the quarter.

In the first quarter of the fiscal 2013, Apple sold a whopping 47.5 million iPhones, but sales of its smartphone would drop to 37 million in Q2 2013 (fiscal). In the current quarter, the company would have to face constraints related to supply chain, including iPhone 5S casing color and new IGZO display for its next generation iPad.

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Apple Inc. Wants To Diversify iPhone Manufacturing

On Tuesday, a fresh report from KGI analyst Ming-Chi Kuo revealed that Apple Inc. might handover some more responsibilities related to manufacturing of iPhones to its hardware partner Pegatron. The hardware partner is rumored to manufacture low-cost FDD based iPhone, along with more than half of legacy iPhone 4 and iPhone 4S orders. In other words, Apple Inc. is trying to diversify manufacturing of its low-priced smartphones and legacy iPhones. Anyway, Pegatron is going to play pivotal role as a major contributor to the company’s iPhone business.

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If the rumor is correct, then Pegatron would manufacture 75% of low-cost iPhone 5 and 55% of iPhone 4 and 4S. However, Apple Inc. is still more relying on Foxconn for most of its iPhone needs, including the production for the FDD-LTE and TDD-LTE iPhone 5S.

Apple Inc. To Add $42 Billion Cash Hoard In Fiscal 2013

More importantly, Apple Inc. generated a cash hoard of $137 billion in fiscal year 2012. The company might announce a reallocation of its cash pile by April this year to boost its stock value. Many still believes that Apple Inc. would continue to grow its cash reserve over the course of 2013; it would add $42 billion over $137 billion this year.

Overall, the Cupertino-based company will have  to face number of challenges such as supply chain constraints, beating expected earnings per share and persuading to shareholders. Would you predict what Apple will do with its cash hoard?

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