If there's one thing that Apple (AAPL +1.05%) hates, it's inventory. CEO Tim Cook has long voiced his belief that inventory is evil, comparing it to running a dairy business where products spoil quickly. The latest rumor on Apple supply chain happenings is that the Mac maker is running into a bit of an inventory problem with components. Is this cause for concern?
Not quite
DIGITIMES is reporting that component shipments related to the new iMacs saw a big drop in February, with March shipments expected to similarly be below January levels. This comes even as Apple is reporting now overcoming manufacturing challenges with the redesigned all-in-one desktop and domestic Mac shipments are estimated to have jumped 31% in January.
Like other supply chain rumors, any single data point should be taken with an entire salt shaker. Apple may very likely have plenty of iMac components sitting around while overall assembly is bottlenecked by the laminated display process. Only recently has Apple seemed to have cleared these manufacturing hurdles. Just days ago, shipping times on the iMac were being quoted in weeks. Those shipping times rather suddenly dropped to one to three days and now new orders for standard configurations ship within 24 hours. Those are positive for Mac units this quarter, especially following the disappointing Mac figure last quarter.
Apple frequently makes hefty component prepayments to secure supply and only utilizes these prepayments when it needs to. For reference, Apple closed out 2012 with $3.9 billion of inventory component prepayments outstanding after utilizing $323 million worth of them during the quarter.
The fact still stands that Apple's actual inventory management (not components) is unrivaled, which you can see from its incredibly high inventory turnover of 71.1. Compare that to PC rivals like Hewlett-Packard, whose inventory turnover is just 13.4. Apple may have extra components idling by, but all that matters is that iMac shipments are on the rise.
