Tuesday, November 13, 2012

Under My Thumb

...boasted Mick Jagger in the Rolling Stones' '60s hit.  Now singing that same tune is Samsung, the Korean electronics manufacturer and supplier to Apple Inc. of the A6 mobile processor used in iPhones.  It has just come to light that Samsung has raised its price for the A6 by 20%.  When Apple executives recently warned investors of shrinking profit margins, this is what they meant.  It is unlikely that Apple will pass on this added cost entirely to the consumer.  The company will have to eat at least some of it.

We have seen what this means for Apple's stockholders.  Among them is the Maine Public Employees Retirement System, which has more money invested in Apple than any other stock.  See what the share price has done in the last seven weeks:

AAPL [6-month chart]

That's a 23% drop.  For MainePERS, a steady practitioner of buy-and-hold, $37 million of portfolio value has been pressed into apple juice.  And the squeeze may just be getting started.  ZeroHedge speculates here that other component suppliers to Apple may be emboldened to follow suit.  Remember the rules, now.  Portfolio insurance is paid by Maine taxpayers sooner or later.  Oy!

Samsung inside.

No comments: