Role reversal: Apple drags down suppliers
Jul 29, 2015 5:57:00 AM
Quite often, we use this blog to discuss the increased reliance companies have on their global network of suppliers – the notion of corporate virtualization - and the importance of carefully managing suppliers and understanding their behavior and ethics. We have seen and written about many circumstances in which a supplier-related failure or business behavior has impacted a company’s reputation or bottom line. In many ways, company and supplier have become one, with the lines between the two increasingly blurred.
We were reminded of this again this week, though in a bit of an unusual way.
News broke earlier this week that Apple had missed its lofty expectation for iPhone sales following a disappointing quarter, at least by analysts’ standards. When publicly traded companies of Apple’s prominence miss expectations, it’s big news and the stock price usually takes a sizeable hit - and it did.
However, shortly after the initial news broke, reports emerged that many of Apple’s suppliers were also taking a hit. Cirrus Logic, Apple’s microchip supplier, slumped 7%. NXP Semiconductors dropped 5% while SkyWorks Solutions suffered a 6% setback.
Typically here at Proxima, we concern ourselves with the performance of corporations, helping them to manage their supplier base in an effort to maximize shareholder value. And usually, we’re talking about how the anonymous far-flung supplier can drag down the corporation.
That said, it was hard not to notice the immediate trickle-down effect Apple’s poor sales numbers – relatively speaking, of course – had on its supplier base. It serves as another reminder that in this era of corporate virtualization, supplier and company are inextricably intertwined. That road is clearly a two-way street.
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