Wednesday, April 20, 2011, 03:00 pm PT (06:00 pm ET)
Disaster in Japan hasn't greatly affected Apple's supplies, COO saysApple Chief Operating Officer Tim Cook said the earthquake and tsunami disaster in Japan did not have a material impact on the supply or availability of components for Apple's iPad 2 or other products last quarter, and he also does not expect the situation to affect the company in the near future.
The real economic impact on Apple from the disaster in Japan will come from sales. Apple has adjusted its expectations down $200 million, represented in its guidance for the June quarter. But Cook noted in his company's quarterly earnings call Wednesday that the economic effects of the disaster in Japan "pales in comparison to the human impact."
Since the event in March, numerous reports have suggested that Apple has seen a significant impact on its component supplies originating from Japan. But Cook took the opportunity during Wednesday's earnings report to dismiss those notions.
Cook revealed that the disaster did not have a major impact on component supplies or pricing in the second quarter of fiscal 2011. He also said that Apple does not anticipate the ongoing situation to have a major impact in the third quarter, either.
However, the COO also cautioned that the situation in Japan remains volatile, with aftershocks and potential power outages.
Cook revealed that Apple's employees have been working "around the clock on contingency plans," to ensure that the company will be able to secure components if deals were to fall through in Japan. But he also said he would prefer to stick with Apple's long-term partners in Japan if possible — something he said he expects will take place in most cases.
"They have displayed an incredible resilience that I have personally never seen before," he said.
Apple's component supply has come under close watch as the company struggles to meet demand for the iPad 2. Though the disaster in Japan did not have an impact in the last quarter, Cook acknowledged that he wishes Apple could have built many more iPad 2 units to satisfy customer demand.
Cook characterized demand for the iPad 2 as "staggering," and admitted that Apple remains "heavily backlogged" at the moment. In fact, he referred to the iPad 2 as "the mother of all backlogs."
Apple sold 4.69 million iPads during its second fiscal quarter of 2011, a number that was below the 6 million Wall Street analysts were hoping for. But looking forward, Cook said he expects Apple to produce a "very large number of iPads" in the third quarter of fiscal 2011.
The company will need that production, as Cook revealed that the iPad 2 will launch in 13 additional countries starting next week. The COO did not reveal what countries would be included, but Apple had previously announced intentions to begin sales in Hong Kong, Korea and Singapore in April. Another potential country is Japan, which was supposed to receive the iPad 2 in March, but the launch was delayed due to the disaster.
During Wednesday's call, Cook was asked when he thinks Apple might be able to satisfy the incredible demand on the market for the iPad 2. But the executive was reluctant to venture a guess.
"Demand has been staggering, and I'm not going to predict when supply and demand will come into balance," he said. "I can only be confident on the supply side."
On Topic: Japan
- Apple's iPad Air, iPad mini take 6 of Japan's top 10 tablet sales spots
- Apple's iPhone 5s & 5c take 9 of Japan's top 10 smartphone sales spots
- Apple's iPhone 5s, 5c take 76% share of Japanese sales in October, including 61% on NTT DoCoMo
- Thanks to iPhone, Japan becomes Apple's hottest market
- Shifting currencies lead to 'stealth' price drop for Apple in emerging markets