First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.
Analysis: Did Apple spend $US2.3bn bailing out iPhone screen supplier Sharp?
- — 08 November, 2012 19:08
Apple may have spent $US2.3 billion bailing out Sharp earlier this year according to an analyst who has examined Apple's capital expenditure for the year.
Apple analyst Horace Dediu notes that Apple spent $US2.3 billion more than forecast on "product tooling, manufacturing process equipment and infrastructure" and suggests that "circumstantial evidence" leads him to believe this may have been to bail out Sharp.
Dediu notes that Apple's 2011 forecast for capital expenditure (capex) for 2012 was anticipated to be $8 billion, including $900 million for retail and $7.1 billion for product tooling and manufacturing process equipment. However, in its 10-K report released in October 2012 Apple revealed it had spent $10.3 billion in total. That's $865 million on retail (an under-spend of $35 million) and $9.5 billion on other areas including "including product tooling and manufacturing process equipment, and other corporate facilities and infrastructure". That's $2.3 billion higher than forecast.
Dediu also notices that: "The cash payments for capex were $2 billion lower than expenditures. This is a curious situation which was not highlighted in previous 10-K reports."
He notes that since "no new debt was booked" it is likely that Apple's over-spend was not paid for in cash but rather "some form of vendor financing".
He suggests that Apple "paid for some of the acquisitions through uncharacteristic or unorthodox means."
"The question is what was it spent on and why did it not go through the cash flow statement?" Dediu asks.
His answer: "Circumstantial [hypothetical, with no proof, he notes] evidence points to the asset being production equipment (or even a whole plant) previously owned by Sharp."
He notes that Sharp is a key supplier of screens to Apple and that it is "in financial distress".
Earlier this year there were reports that Foxconn was to invest in Sharp. That deal fell through however, states Dediu.
"My guess is that these attempts to shore up Sharp are directed by Apple to ensure both continuity of supply and a balanced supplier base (offsetting Samsung, another supplier.) If Sharp were to enter into some form of bankruptcy, the key plant(s) used in producing screens for Apple might be 'up for grabs' by creditors and they might be taken off-line, jeopardizing Apple's production capacity, irrespective of contractual obligations," suggests Dediu, with the financing for this deal " done through a swap of 'pre-orders'."
Read Dediu's complete analysts here.