These two companies did not fare so well in the past week for stockholders, but for very different reasons. Apple saw major losses this quarter for the first time in a long time and Mitsubishi was hit with a scandal very similar to the one Volkswagen went through.
If everyone already has their Apple products and the Apple Watch has still yet to catch on, then where is Apple really going to go at this point? Their growth has been astonishing, and it’s remarkable just how far they’ve come as a company. With a reported 13% fall, Apple has finally had a turn in profits after 51 quarters.
There’s no doubt that much of this has to do with the fact that their products aren’t meant to be replaced every year, and everyone who wanted a phone, tablet or computer is likely content with their current model right now. It has caused some people to wonder though if Apple has made production mistakes or if they’re starting to lose their intuition as to what the public may want.
The Apple TV and the Apple Watch are two products that haven’t managed to gain as much traction as the company had hoped. Adding to those failures is a new CEO (Tim Cook) who is constantly trying to live up to the pressure of being as successful as his predecessor, Steve Jobs. We’re talking about a company who managed to pull itself out of an extremely large hole.
To make matters a bit worse, there’s been lots of recent chat about the relationships America currently has with China. It seems that China is starting to give the evil eye to Apple. Billionaire Carl Icahn pulled his Apple stock when he rumors of a souring relationship began floating around. The move scared investors causing somewhat of a sell off.
Apple chose China to manufacture its products partially to keep costs down, but also because their regulations are not as stringent as those in other countries. It’s also inspired a resurgence of attention about working conditions in China, and general criticism of Apple as a conglomerate. However the public would feel about it though, moving shop would be a huge blow in terms of logistics to the most valuable company in the world right now.
Moving from China to Japan, we find that carmaker Mitsubishi has not exactly chosen the most ethical path when it comes to their fuel economy tests. Apparently 25 years has gone by without anyone catching the lie, and Mitsubishi finally came clean about their 625,000 cars that don’t meet the requirements for fuel economy in Japan.
The market value immediately dropped by half, and the EPA is stepping in so the testing will start to give the real results. The actual scandal itself doesn’t sound all that dramatic, but it’s indicative of more serious problems within the company.
In 1991, Japan was starting to see more stop-and-go traffic, and they wanted a certain amount of air resistance when doing so. When results were measured for the eK Space, Dayz and eK Wagon and Dayz Room it was found that the cars weren’t in line with the new restrictions. But the company reported that they were. It was likely that there was a lot of internal pressure coming from upper management to fudge the numbers for the new testing procedures to save money and time.
This has caused major headlines and headaches for the company, and their sharp decrease in value is a huge blow. Car production and sales have stopped for the four models under question, and they’ve been performing damage-control PR both in their own country and abroad.
Before you make any moves, consider that neither event represents the downfall of either company. Apple has first and third-world problems, but they also have intense resources behind them to pull sales back up — even in the face of drastic changes. It can mean a good time to jump in with investing when people start to panic.
Mitsubishi’s little fiasco could see much more trouble due to the scandalous nature, but they’re another company who has been generally smart about production and targeting consumers. They may be a bit of a niche market in certain areas, but they’ve got global recognition in spades. Before you look to emulate Icahn and cause another market drop, it’s important to see what’s happened in context and evaluate how you feel about each company’s decisions first.
Regards,
Ethan Warrick
