Beyond the Storm: Navigating the Uncharted Waters of the Post-Pandemic Corporate Landscape
As the storm of the pandemic begins to subside, corporate leaders face a landscape that has forever changed. The question …
January 31, 2022: -Apple CEO Tim Cook said the company is seeing inflationary pressure in an interview with CNBC on Thursday. The company reported almost $124 billion in sales in its December quarter.
“We try to price our products for the value that we deliver, and we see inflationary pressure,” Cook said. “I think everybody sees inflationary pressure. There are no two ways about that.”
The observation from the head of the country’s recent valuable company comes as the Biden administration and Federal Reserve grapple with questions about the way tame elevated inflation and whether to raise interest rates.
The consumer price index, a metric measuring price increase across a basket of consumer goods, increased 7% in December from a year earlier, its fastest annual pace in almost 40 years.
On an earnings call with analysts, Cook expanded on how inflation affected Apple’s business and gave an instance of shipping costs.
“We’re seeing inflation, and it’s factored into our gross margin and opex that Luca reviewed with you earlier,” Cook said. “Logistics, as I’ve mentioned on the last call, is very elevated in terms of the cost of moving things around,” Cook added.
Cook said that he is hoping the increased costs would be temporary.
“I would hope that nearly a portion of that is transitory, but the world has changed, and we’ll see,” Cook said.
Inflation hasn’t hurt Apple’s business, which reported increasing gross margins in the December quarter. Apple hasn’t raised prices in response to inflation in the U.S. Cook didn’t rule out the possibility of price increases in his interview with CNBC nor on Apple’s earnings call.
Cook said he expects supply chain constraints contributing to inflation to ease Apple in the future months.
In September, Nikkei Asia reported that chip prices were increasing at TSMC, Apple’s chip manufacturer and that technology company could decide to pass the increases to customers. On Thursday, Cook said that “we’re doing okay on the leading edge stuff,” referring to the supply of the processors that TSMC manufactures.
Apple doesn’t often increase prices after products are released, although it sometimes responds to regional economic conditions. For example, last year, Apple introduced prices at its online Apple store in Turkey as the lira fell in value and inflation in the country hit a two-decade high.
However, Apple sometimes increased prices compared to last year’s models when introducing new iPhones and other devices in the fall.
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