Why Did Apple Stop Its Production of Wireless Routers?



Price movement

Apple (AAPL) has a market cap of $595.2 billion. It rose 1.5% to close at $111.73 per share on November 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 5.7%, -3.7%, and 8.5%, respectively, on the day.

AAPL is trading 0.58% above its 20-day moving average, 0.77% below its 50-day moving average, and 8.3% above its 200-day moving average.

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Related ETF and peers

The Schwab US Broad Market ETF (SCHB) invests 2.5% of its holdings in Apple. The YTD price movement of SCHB was 9.8% on November 21.

The market caps of Apple’s competitors are as follows:

  • Alphabet (GOOG) — $523.8 billion
  • Microsoft (MSFT) — $475.5 billion
  • International Business Machines (IBM) — $155.3 billion

Latest news on Apple

In a press release on November 21, 2016, Bloomberg reported, “Apple Inc. has disbanded its division that develops wireless routers, another move to try to sharpen the company’s focus on consumer products that generate the bulk of its revenue, according to people familiar with the matter.”

The report also said, “Apple began shutting down the wireless router team over the past year, dispersing engineers to other product development groups, including the one handling the Apple TV, said the people, who asked not to be named because the decision hasn’t been publicly announced.”

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It continued, “Exiting the router business could make Apple’s product ecosystem less sticky. Some features of the AirPort routers, including wireless music playback, require an Apple device like an iPhone or Mac computer. If the company no longer sells wireless routers, some may have a reason to use other phones and PCs.”

Apple’s performance in fiscal 4Q16

Apple reported fiscal 4Q16 net sales of $46.9 billion, a YoY (year-over-year) fall of 8.9% from its net sales of $51.5 billion in fiscal 4Q15. The company’s gross profit margin and operating margin narrowed 180 basis points and 310 basis points, respectively.

Its net income and EPS (earnings per share) fell to $9.0 billion and $1.67, respectively, in fiscal 4Q16, compared to $11.1 billion and $1.96, respectively, in fiscal 4Q15.

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Fiscal 2016 results

In fiscal 2016, AAPL reported net sales of $215.6 billion, a YoY fall of 7.7%. Its net income and EPS fell to $45.7 billion and $8.31, respectively, in fiscal 2016, compared to $53.4 billion and $9.22, respectively, in fiscal 2015.

AAPL’s cash and cash equivalents and inventories fell 2.8% and 8.7%, respectively, between fiscal 2015 and fiscal 2016. Its current ratio and debt-to-equity ratio rose to 1.4x and 1.5x, respectively, in fiscal 2016, compared to 1.1x and 1.4x, respectively, in fiscal 2015.


Apple has made the following projections for fiscal 1Q17:

  • revenue of $76 billion–$78 billion
  • gross margin of 38%–38.5%

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