We’re deciphering Apple executives and their fourth quarter statements right now – but the initial take away at this stage is the company’s mysterious admission that “air freight costs” are set to rise "abnormally" in the company’s first quarter.
Now, we know we’re all incredibly curious as to just what Apple’s hatching up for its future product road map, but company executives have so far declined to disclose just what it is they’re planning to send into flight. And they don’t seem to want anyone else to be too excited about it – so ditch those tablet rumour-writing pens, folks.
All execs have said at this point is that these increased air freight costs are “nothing to do with iPhone”, and “are about getting units into the channel for the holiday.”
Units of what? This is bound to inflame the Apple rumour machine.
Specifically, the exchange ran as follows:
Toni Sacconaghim an analyst at Sanford Bernstein asked about Apple’s stated availability issues as per the iPhone 3GS, questioned if component acquisition problems were to blame and asked, "Related to that you had also mentioned that air freight you expected to go up next quarter as a reason for gross margins, I’m not sure if that was in relation to phones or anything else but perhaps you can address that as well?"
Tim Cook confirmed demand for iPhone 3GS simply exceeded supply, "I think you would probably put that in your first category of a good old fashioned demand issue which is a nice problem to have in the scheme of things. Now, because it was outstripping supply it creates component shortages as we go out to the market to secure more components," he said, confirming the problem is pretty much resolved (Ed note: hopefully, unless everyone in China buys an iPhone this month).
Then he hit us with the rumour-raiser: "The air freight is not related to the iPhone so these are unrelated topics. But, generally speaking the air freight is planned to get enough units in to the channel in time for the holidays and is necessary for that reason."
Sacconaghi speculated that Q1 air freight costs most likely are often higher than in other quarters, as company management move assets around the planet to deal with Christmas demand. Then CFO Oppenheimer hit us with a fact to leave us baffled: "It’s more than normal so you’re correct that in general we spend more in freight in Q1. However, this increase is larger than usual. I’m sorry I can’t be specific on the product but it’s an abnormal sequential increase."
So, just to clarify, Apple is spending more on air freight in the future quarter as it struggles to cope with an "abnormal sequential increase". We’re wondering what this could be, dismissing an iPhone nano, tablet, new Mac and so on, we find ourselves speculating on an iPod touch with a camera. Though we’re not sure the new name – abnormal sequential increase – will catch on…
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PS: To cite Shakespeare, this could of course turn out to be much ado about nothing, but if it’s not connected to keeping iPhone inventories strong, then what is the cause? Curious, isn’t it?