The Fall of Apple?!?!?

There has been tons of speculation recently about the way the most interesting company in the world, known as Apple, is headed. Stock prices fell below $400, an over 40% decline since an all time high last September. The company has not introduced a new product in over six months and it will be at least another three by the time a new one is available in the marketplace. Lastly, competition is rising as the  HTC One and Galaxy S4 are slated to be on the market soon which could lead to a decrease of sales of the iPhone. Apple will release its quarterly results next Tuesday April 23rd and the numbers are expected to fall short of Apples quarterly forecast, which will decrease the stock price even more.

While there is cause for concern, as with any major corporation, Apple does have many thing to look forward to with one of them being customer loyalty, great management, and near future product releases.

There is not a consumer base out there that are as loyal as Apple consumers. An easy way to prove this is look around any DePaul classroom. First of, the vast majority of students have some a Macbook as their laptop. A greater portion of these students also have an iPhone as their phone. Finally, I would bet that these students also listen to iPods on their morning commutes to school or work. To truly find a company that has better customer loyalty would be a task in itself.

Another reason that Apple will rebound is because they have great management. Many people say that Steve Jobs made the company what it is today. That is true in a way but the support and management around Jobs had to be up to his level as he could not control every part of the company. Apple did not become one of the most valuable companies in the world because of one person.

Many investors proclaim that the reason the stock price is falling is because Apple has not released any new products. That is about to change in the upcoming months as there are speculations the new version of the iPhone is slated to come  out late this summer. When Apple states the new iPhone release date, that alone will boost stock price. As shown by the image to the right, stock prices increase significantly when a product is released.




As we know, Apple has been one of the most dominating and valuable companies in the world. Recently stock prices have dropped over 40% and sales are predicted to fall short of the quarterly forecast. Many loyal consumers are waiting for the next big thing from Apple but the company is not delivering. What do you think about Apples recent struggles? Has Apple really lost its touch in the market as competition is constantly increasing or will the release of the new iPhone restore Apples value and investor confidence in the company?



A Gamble for P&G

Since the inception of the Procter and Gamble (P&G) corporation, the company has provided households alike with brands such as Gillette, and Tide. In the wake of the financial meltdown the company’s has witnessed loss of profit as well as the loss in market-share. Many factors contribute to the loss, yet the company still allows for Robert McDonald, Chairman and CEO to remain at the helm of the company after three years of little improvement.

In February, McDonald announced the company’s first cost cutting strategy, calling for a plan that would save $10 Billion dollars over the next four years, at the expense of cutting some 4000 workers and focusing on the company’s top 40 most profitable market shares. McDonald also announced that the company would be buying back stocks in hope to increase the market price. Large stockholders view McDonald’s action as either too little or too late.

In July, William Ackman, of Pershing Square Capital, who controls $1.8 Billion dollars of P&G stock issued a 75 page complaint of McDonald’s tenure at the as Chairman and CEO, criticizing his leadership, all while pressuring the P&G’s board to force the resignation of McDonald. Since Ackman’s public complaint the board has cut McDonald’s and other P&G executives salaries by 6%, in addition to cutting their performance bonuses. The actions resulted in the stock of the company 12% jump, ending this week at a 52-week high.

McDonald is not the only problem for P&G, but can anyone blame Ackman for compiling such a report about the man who is controls the future of his investment? P & G in recent years has mis-forecasted earnings three times, as well many new product launch’s have been delayed. McDonald alongside the other executives seemed to have missed the cyclical component in their forecasting. The company continued producing large number of their high-end products, causing customers to jump ship and buy the more basic items. In example of this is P&G continued mass-production of high-end tide laundry detergent products. Such products were noticeably more expensive because the detergent had a scent that was more pleasing and a better product design, but the results were the near the same as the store brand, creating customers to cutback and buy the store brand. The company’s strategies in the wake of the recession were not in touch with their customer base and the company continues to be effected by such decisions of the company.

P&G is taking a risk allowing for McDonald to continue as leader, the next few months Ackman will not be the only person closely observing the decisions of the McDonald and his team. For P&G’s sake many hope that McDonald’s financial cost strategies do pay off, but only time will tell the real truth.

Forecasts vs. rumors

Corporations like Apple, Samsung and Motorola; we hear rumors about them all the time. Like Apple with the iPhone 5, and Samsung with the new S3 and Motorola with the new Atrix 3.

I still can’t forget when everyone I know didn’t buy their iPhone 4 waiting for iPhone 5 and they were disappointed with the iPhone 4s. And now, the same thing is happening, people who are about to upgrade their phones and didn’t buy the S2 saying they’ll wait for the new Galaxy S3 and or iPhone 5.

Since I am obsessed with technology, and I keep up to date by buying the latest gadgets in the market. And while doing this course, during class when we were talking about product cycles and inventory management, I began wondering. At that very moment, I remember when I was thinking in my own world, when my teacher asked me a question that I didn’t pay attention to, and I had to ask her to repeat the question again. It was about the product life cycle and how short it is with technology.

Then during class, we started looking at the forecasting time horizon, during this part of the discussion; I was wondering what is their forecast period? Short?

We move on to the forecast methods, and during that very specific part I was trying to see which method they could possibly use? I know as the Professor said, forecasts are seldom perfect. However, they need some kind of forecast to keep the inventory right.

Immediately two blog posts of my colleagues came to my mind. First, Car dealerships with zero cars to sell. Corporations like Apple and Samsung do not want to be like those dealerships.

Second, Why Guess When You Can Forecast?

I quote from my colleague post:

“The mistake our team made was to purchase the product inventory from manufacturing companies without accurately forecasting the demand for those products.

The result? We ended up with far more inventory than we could sell. Food products are perishable; their expiration deadlines are much shorter than for other consumer goods. As those expiry dates approached, a considerable percentage of the inventory we had bought was wasted in our own warehouse. Needless to say, the company suffered some heavy losses.”

I think those corporations deal with this situation very frequently, in fact, the news of the S3 affected the iPhone 4s sales in some regions specifically in Bahrain. I do not have data to back my theory but I have seen this happening.

I wonder how does corporations like Apple deal with those rumors? How can they forecast the demand on the existing products when there is a rumor about a new product? I believe those corporations are living on the edge with their products and forecasts. They probably calculate the risk and add it to the product price to cover the forecast loses? I don’t know. But I can tell you this, it must be really hard.