Linked List: December 16, 2015

Wednesday, 16 December 2015

Written by an anonymous contributor to Motherboard:

When I reached the actual party, the first thing I saw was CEO Marissa Mayer herself behind a series of velvet ropes, dressed in a long sequined gown and seated on a pure white arm chair. Attendees could sit next to her on an adjacent couch and pose for a photo. She was very pregnant and ended up giving birth to twins less than a week later. […]

How could something like this be sustainable, I wondered, especially for a down-on-its-luck company like Yahoo which, as we speak, is poised for a fire sale of epic proportions?

The reported cost of the party is in the millions. (Editor’s note: One shareholder pegged the price at $7 million; a source with knowledge of the cost of the party told Motherboard the price was less than a third of that.)

For a company Yahoo’s size, a $2-3 million year-end party is not exorbitant — even considering the company’s current travails. To me the weird part is the queue for employees to get their picture taken with Mayer.

Update: One plausible explanation: Mayer wanted to say hi to as many employees as possible, but needed to sit because she was one week away from delivering twins. I.e., that it was about being able to sit and rest. Even then, though, the optics of this setup were terrible — particularly in light of shareholder criticism about lavish spending on things like private jets to Davos.

Morgan Stanley Analyst Katy Huberty Predicts First-Ever Year-Over-Year Drop in iPhone Sales ★

Philip Elmer-DeWitt, writing for Fortune:

According to Huberty, rising international prices and smartphone market oversaturation outside China are weighing on Apple’s primary source of revenue (52% of fiscal 2015 sales).

The same surveys that showed iPhone sales rising 6.8% in fiscal 2016 now show them falling 5.7%. In the current quarter — the so-called “tough compare” because last year’s blow-out iPhone 6 unit sales will be hard to beat — what was going to be a 6.1% increase is now a 0.6% decline.

Has to happen eventually, but somehow I don’t think 2016 will be the year. Apple’s stock price took a dive on this “news”, of course.

On the conference call Huberty was joined by Jasmine Lu, who covers the Asian supply chain for Morgan Stanley. Lu’s iPhone component order estimates have been cut significantly: 10% in the December quarter and 20% in March. iPhone demand, she said, seems to be weaker than Apple had expected only two months earlier.

Trying to predict iPhone demand from Apple’s supply chain orders hasn’t worked out so well in the past. Here’s a January 2013 report from the WSJ:

Apple Inc. has cut its orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation said Monday.

Apple’s orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, two of the people said.

According to Apple’s actual results for that January-March quarter, iPhone sales were up modestly year over year, from 35.1 to 37.4 million iPhones. It’s possible that Apple had expected or at least hoped to sell more; it makes no sense that they expected or even hoped to sell double that amount.