Pegatron Outlook Shows Barney Stinson is Out of Sync With Apple Customers
Barney Stinson has one rule. The besuited womanizer from "How I Met Your Mother" is in no doubt about the fact that "New. Is. Always. Better."
Apple consumers seems to be a little out of sync with Barnabus, however, and continue to buy the company's older products.
That's great news for Pegatron, the Taiwanese maker of the iPhone 4S. When Foxconn started ramping up production of the iPhone 5 last year, it seemed like Pegatron drew the short straw by retaining the contract to make the older device after both of them shared manufacturing duties for the iPhone 4S.
Fast forward half a year and look who's laughing now. Hon Hai, Foxconn's listed flagship, just posted its biggest drop in revenue in 13 years, and Apple itself forecast sales and gross margins for the June quarter that trailed estimates after its first profit drop in a decade.
Pegatron, on the other hand, just told investors it expects revenue from its communications division, which makes the iPhone 4S, to be little-changed this quarter compared with the last. With the iPhone 4S accounting for a majority of the unit's sales, Pegatron CEO Jason Cheng said demand for the 4S remains stable. That's not bad when you consider the product was released around the time when Tim Cook was named CEO.
Apple hinted at the iPhone 4S's staying power last month when CFO Peter Oppenheimer told investors that the reason why the average price of its iPhone line was shrinking is because the "mix" of products was skewing in favor of the older, cheaper model. Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment.
For Pegatron, the trend is particularly rosy given the fact that its consumer electronics division, which counts the iPad Mini as its biggest contributor, will post a 25 percent to 30 percent drop in sales over the same period. Further icing on the cake for the company is that since the iPhone 4S is a "mature" product, and thus easier to make, the company is reaping better profit margins on the device than it can manage from most other products.
The contradiction is worthy of Barney himself, who confidently declares, "'New. Is. Always. Better.' is my oldest rule, which makes it the best."